According to new Tax Policy Center estimates, the new Tax Cuts and Jobs Act (TCJA) will reduce the number of households claiming an itemized deduction relating to gifts given to non-profits from 37million to around 16 million for 2018. The new law will also reduce the federal income tax subsidy from $63 billion to about $42 billion, or by roughly one-third. The TCJA brings about four changes that will likely discourage charitable giving. First, it lowers individual income tax rates, which lowers the value of all tax deductions. Next, it caps state and local tax deductions as well as doubling the standard deductions. Finally, TCJA doubles the current estate tax exemption threshold to $22 million for couples, which serves to discourage tax-motivated bequests by highly affluent households.
See Howard Gleckman, 21 Million Taxpayers Will Stop Taking Charitable Deductions Under the New Tax Law, Forbes, January 11, 2017.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
