As someone who works for a nonprofit organization, a question that I get fairly often is “What impact will the new tax laws have on nonprofits?”
It’s an excellent question and quite honestly it isn’t an easy one to answer. Before I do, here’s a little background first. Congress passed the 2018 Tax Reform Act, the largest piece of tax reform legislation in three decades and it will impact the tax return that most people will complete for the 2018 tax year.
A couple of the key provisions of the new tax laws that pertain to individuals are as follows:
The standard deduction doubled from $6,350 to $12,000 for individuals, and from $12,700 to $24,000 for married couples.
The charitable contribution deduction limit rose from 50% to 60% of an individual’s adjusted gross income
So, with a higher standard deduction, it’s natural to assume that far fewer Americans will itemize their taxes, leading to speculation that fewer taxpayers will make charitable donations for the purpose of gaining tax breaks. No formal studies have been conducted to predict the actual impact of doubling the standard deduction but it’s probably safe to say that those motivated by tax breaks will decrease – or even eliminate – their charitable contributions.
The key phrase is “those motivated by tax breaks”. For sure, some charitable donors use tax breaks as an incentive, but I believe that most of our supporters at the Oregon Lions Sight & Hearing Foundation give for these reasons:
These are only some of the reasons that people give to OLSHF and I don’t believe that new tax laws will change how people feel or why they want to help. With the end of the calendar/tax year looming, only you can decide what motivates you to support OLSHF or other charities of your choice, and I hope you’ll be guided by your heart, not the new IRS tax code.