Washington Proposals that Affect the Charitable Deduction

Universal Charitable Giving Act: In October 2017, Rep. Mark Walker (R-NC) introduced the Universal Charitable Giving Act of 2017 in the House of Representatives. The bill would extend the charitable to non-itemizers, often referred to as a universal charitable deduction, which would be capped at one-third of the standard deduction. The legislation would also preserve the current charitable deduction for those who itemize. On November 14, Senator James Lankford (R-OK) introduced the Senate companion to the Universal Charitable Giving Act. Charities have rallied behind a universal charitable deduction as a potential solution to the drop in giving that will result from a doubled standard deduction.

Final Version of the Tax Cuts and Jobs Act: H.R. 1, or The Tax Cuts and Jobs, act was officially signed into law by President Trump on December 22, 2017. This follows both the House and Senate passing the final legislative text of the bill on December 20, 2017, as it was released by the Conference Committee. The majority of the bill went into effect on January 1, 2018.

The final version of the bill includes several provisions important to the charitable sector:

  • Doubled standard deduction to $12,000 for individuals and $24,000 for marrieds until 2025
  • Increased AGI limits to 60 percent for cash contributions to public charities and certain private foundations
  • Repeal of Pease limitation until 2025
  • Doubled estate tax exemption to $10 million until 2025
  • 1.4 percent excise tax on private college and university investment income if assets are valued of at least $500,000 per full-time student
  • 21-percent excise tax on tax-exempt executive compensation over $1 million
  • Repeal of exception to the substantiation requirement for gifts over $250 when the donor organization reports the gift; effectively requires all donors to substantiate gifts over $250

Notably, several provisions from the House’s original bill were not included:

  • ​Streamlined private foundation excise tax
  • Temporary repeal of the Johnson Amendment
  • Reporting requirements for DAF sponsoring organizations
  • Estate and gift tax repeal after 6 years
  • Adjusted charitable mileage rate for inflation

 

To see previous proposals to reform the charitable deduction, click here.

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