The 2018 tax law has good news and bad news for charities and people who like to donate to them.
The good news is that the new tax law raises the limit on the amount of charitable donations that can be deducted in a year by 10%. It used to be 50% of your adjusted gross income, and now it’s 60%.
The bad news is that charitable deductions only kick in as a tax break if your itemized deductions exceed the standard deduction – which is now significantly larger. So while people who give lots of money to charities, big donors, will have a new incentive to keep giving, people who give small or medium sized donations might no longer get a tax break on those contributions at all. They’d end up paying the same amount in their taxes with or without giving charitable contribution.
So if people are giving for the tax break, there could be a spike in big gifts, but we could expect a significant drop in small ones.
Find out how the new tax law affects you. Contact a Tax Ninja for a consultation.