This week, the House and Senate had their plates full with tax reform legislation and funding the government. On Wednesday, both the House and Senate advanced the Republican tax reform bill, which now goes to the President’s desk for signature. Then on Thursday, the House and Senate passed a short-term budget until January 19th, giving leaders time to come up with a long-term deal.
Following the Senate and House passage of their respective tax reform bills, the two chambers had to create a conference committee to reconcile the differences between the two pieces of legislation. The conferees negotiated with provisions that were different between the bills, and ultimately produced a bill that looked somewhat different than both originals.
For our sector, the identical provisions in both the House- and Senate-passed bills made it into the final bill:
- 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 donee organization reports the gift; effectively requires all donors to substantiate gifts over $250
Notably, several provisions from the House 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
The ACR staff worked with colleagues in the sector this year to include a charitable deduction for all taxpayers in the final bill, but ultimately didn’t get enough support in Congress. It’s not clear what the total impact of the final tax bill will be on charitable giving, but we plan to remain vigilant in 2018 and work with lawmakers to maintain and enhance charitable giving and its incentives.
Now that the Senate and House have passed the tax reform bill, it lands on President Trump’s desk to be signed into law. President Trump said he hopes to sign the bill by Christmas, and it seems he will meet that goal following a near miss that was saved by the government funding bill yesterday.
You may recall, back in September, Congress extended current government funding levels to expire early this month. Then, when that deadline approached, they punted again in order to focus on tax reform. Well, today is the new deadline, and lawmakers again punted the government funding debate to January 19th.
This week’s measure, which passed the House and Senate on Thursday and was signed by the President today, includes several add-ons to appease lawmakers, such as waiving arcane tax cut rules and keeping the Children’s Health Insurance Program funded through March, among other provisions.
This sets up a government spending fight early next year when lawmakers are expected to craft an omnibus government funding bill to get them to September 30, 2018. Stay tuned for the action in January.
Just because a tax reform bill has passed doesn’t mean our work stops. In 2018, we expect there will be several bills that could include changes to nonprofit rules: a tax bill to correct some of the glitches with the tax reform bill that just passed, as well as a tax bill that will be part of welfare reform. It will be as important as ever for ACR and its colleagues to remain steadfast in our efforts to protect and expand charitable giving,
We look forward to working with all of you in the new year and are excited for what 2018 has in store for charitable giving.
Happy Holidays to you and yours!
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