15 February 2019

Caught Our Eye: It’s Not Just Congress, Charitable Giving Provisions Key Issue in State Legislatures

The tax treatment of charitable giving isn’t an issue at only the federal level; individual states wrestle with these provisions as well. The Arizona House Ways and Means Committee just approved a bill that would allow Arizona residents to claim a charitable deduction even if they also opted for a standard deduction, meaning they did not itemize on their taxes. Howard Fischer of Capitol Media Services reported the legislation comes after local charities say they have seen a drop in donations:

The 6-4 party-line vote on the Republican-dominated Ways and Means Committee followed pleas from various charities that said they already are seeing a drop in donations because of the federal Tax Cut and Jobs Act. That law not only decreased certain deductions but doubled the amount that individuals can claim in a standard deduction.

That, in turn, is resulting in more people choosing not to itemize. Without any benefit of a deduction, some charities report people are giving less.

This legislation appears to adopt a state-level version of the universal charitable deduction, which would expand the charitable deduction to all Americans regardless of itemizer status and has been a key priority for ACR. According to Fischer, the Arizona version still has to clear the House Appropriations Committee before going to the full House for consideration.

Meanwhile, in Montana, a charitable giving tax credit that has generated more than $145 million in charitable services to the state is set to expire unless action is taken by the state legislature. Mary K. Rutherford, president and CEO for the Montana Community Foundation, and Liz Moore, executive director of the Montana Nonprofit Association, co-authored an op-ed in the Billings Gazette about the provision:

For more than two decades, Montanans have benefited from the Montana Charitable Endowment Tax Credit. The MCETC encourages individuals, as well as businesses and organizations, to make lasting impacts in their communities. Those impacts have totaled more than $145 million in service to Montanans since the credit was established in 1997. The MCETC is also responsible for millions more in gifts that exceeded the qualifying credit amount.

More than $145 million in a rural state like Montana is life-changing. This is money that is at work today, tomorrow, and forever for the communities we live in. The benefit is as high, wide and handsome as our great state, making a difference in every corner of Montana and in every nonprofit arena.

Lawmakers in Montana and Arizona are taking action to maintain and expand vibrant charitable sectors in their respective states. Elected officials, both federal and local, need to hear from us that these incentives work. They need us to educate them on the impact these tax provisions have in our communities and the services they help create for those in need. If we don’t do it, no one will.