How The 2018 Tax Law Increases Charitable Giving Deductions

The Tax Cuts and Jobs Act (TCJA) significantly increased the standard deduction. This increase means fewer taxpayers will benefit from itemizing and will not gain an advantage from tax deductions, charitable or otherwise. For those taxpayers still itemizing, a reduced overall tax rate means their deductions are less valuable. Despite these changes, there a few hidden details that are part of the TCJA that serve to increase the value gained from charitable deductions for some donors.

With so much focus on charitable deductions at the federal level, you may have overlooked the increased value of state charitable deductions. An example, say a California resident is paying the state’s top tax rate of 13.3%. Under the old tax law, a $100 charitable donation could reduce this taxpayer’s federal and state taxes owed by as much as $47.63. Under the new law, the same donation could reduce taxes owed by $50.30.

See Russell James, How The 2018 Tax Law Increases Charitable Giving Deductions, Financial Advisor, Marcy 18, 2018.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.