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In what might seem like an annual tilting at the wind, the Charitable Act to expand and extend the expired non-itemized deduction for charitable giving was reintroduced in Congress last week. It was introduced the around the same time as a freeze was put on federal spending which was lifted within 24 hours.
The bill would allow Americans who donate to charities, houses of worship, religious organizations, and other nonprofits of their choice to deduct that donation from their federal taxes at a higher level than the previous $300 deduction. The new bill would increase the previous $300/$600 cap on the non-itemizer deduction to one-third of the standard deduction, equal to roughly $4,500 for individuals, $9,000 for joint filers.
The new bill was introduced in bipartisan fashion by Sen. James Lankford (R-OK) and Sen. Chris Coons (D-DE). Lankford and Coons were joined on the bill by co-sponsors senators Catherine Cortez Masto (D-NV), John Hickenlooper (D-CO), Pete Ricketts (R-NE), Amy Klobuchar (D-MN), Rev. Raphael Warnock (D-GA), Jeanne Shaheen (D-NH), John Curtis (R-UT), Marsha Blackburn (R-TN), Jerry Moran (R-KS), Katie Britt (R-AL), and Tim Scott (R-SC).
According to information from The Nonprofit Alliance, in March 2020, the $2.2 trillion CARES Act of 2020 was signed into law, establishing a universal charitable deduction of $300 per taxpayer, regardless of whether filing as an individual or married, for the tax year 2020. Then, in December 2020, the $900 billion Consolidated Appropriations Act of 2021 was signed into law. This act included an increase for 2021 in the Universal Charitable Deduction for married couples filing jointly to $600.
The policy resulted in 90 million tax returns utilizing the deduction, and households making between $30,000 and $100,000 saw the largest increase in charitable giving. Charitable organizations received $30 billion in increased donations as a result.
In late 2022, it appeared Congress would pass the package of 27 expired tax provisions, including the Universal Charitable Deduction, which expired on December 31, 2021. Congress could not come to closure on the package, leaving the without a Universal Charitable Deduction.
The bill is supported by numerous organizations, among them the National Council of Nonprofits, Charitable Giving Coalition, the Nonprofit Alliance, Faith & Giving Coalition, Leadership 18, Independent Sector, YMCA, Council on Foundations, ECFA and the Association of Fundraising Professionals.
“The temporary non-itemizer charitable deduction implemented in 2020 and 2021 led to an additional $18 billion in donations to nonprofits. As nonprofits are faced with higher demand for services, increased costs, workforce challenges, and declining donations, the Charitable Act presents an opportunity to reinstate that incentive and provide nonprofits with more resources to carry out their mission. The networks of the National Council of Nonprofits enthusiastically endorse this vital legislation and appreciate leaders like Sen. Lankford and Sen. Coons who continue to be stalwart champions for these efforts and the nonprofit sector,” said Diane Yentel, president & CEO, National Council of Nonprofits, said via a statement.
“The Charitable Act isn’t just about tax policy — it’s about democratizing generosity and unleashing the full potential of American philanthropy. When teachers, nurses, and other everyday heroes can’t receive the same tax benefits for their charitable giving as wealthy donors, we’re reinforcing inequality in our giving ecosystem. We cannot afford to discourage giving from hardworking Americans. The Charitable Act would empower all donors, regardless of tax filing status, to make a bigger impact and strengthen the vital services that our communities desperately need,” said Shannon McCracken, CEO The Nonprofit Alliance via a statement.
“Generosity is a core American value that should be incentivized to help meet the evolving needs of communities,” said Kathleen Enright, Council on Foundations president and CEO, via a statement. “The temporary non-itemizer deduction in the CARES Act successfully sparked more people to give. We hope Congress will cement this effective policy into law and inspire many more generous Americans to give charitably to support one another and the causes they value. We thank the House and Senate sponsors of the Charitable Act for their leadership on this issue.”
“Fortunately, Congress has a rare opportunity to strengthen the work of charitable organizations and the fabric of our nation by passing the Charitable Act this year,” said Independent Sector President and CEO Akilah Watkins, Ph.D. via a statement.
“According to Q3 2024 data compiled by AFP’s Fundraising Effectiveness Project, the number of small gift donors (gifts under $100) saw a steep decline of -12.4%; this is a continued decline in the last two years since the charitable deduction for non-itemizers was not renewed.,” said Mike Geiger, president and CEO of the Association of Fundraising Professionals, via a statement. “On behalf of our more than 26,000 fundraising professional members that raise more than $100 billion annually for charities, we are grateful for our Congressional champions reintroducing the bipartisan Charitable Act as this giving incentive will support nonprofits in their communities who rely on these funds to provide much needed services.”
