Public Policy
Charitable Deduction

New Law

The new tax law:

  • Lowers top individual rate from 39.6 percent to 37 percent. The top bracket will apply to individuals with incomes over $500,000 for individuals, $600,000 for married couples.
  • Doubles the standard deduction threshold to $12,000 for individuals and $24,000 for married couples and does not include a universal charitable deduction proposal. This means that less than 10 percent of American taxpayers (those projected to itemize under the plan) will benefit from the charitable deduction.
  • Allows taxpayers to deduct cash contributed to public charities like colleges, universities and independent schools up to 60 percent of his or her Adjusted Gross Income per tax year, up from 50 percent under current law. The previous limit of 30 percent of AGI for capital gain property remains unchanged.
  • Repeals the overall limitation on itemized deductions (Pease limitation).
  • Repeals the special rule that allows taxpayers to deduct 80 percent of a charitable gift made for the right to purchase tickets for college and university athletic events.

Impact on Educational Institutions

The bill significantly reduced the number of taxpayers who itemize their tax returns (from roughly 30 percent of taxpayers to 11.6 percent), effectively eliminating the charitable deduction for 88 percent of Americans. This decrease in eligible taxpayers will accelerate an already troubling philanthropic trend. Consequentially, the new law will increase the cost of giving for donors to educational institutions, particularly donors who give current gifts to the institution's annual fund. Charitabe donations help colleges, universities and independent schools achieve their teaching, research and public service missions. As federal and state governments continue to cut funding for higher education, raising private support from individuals has become even more crucial for colleges and universities. Educational institutions and those we serve can't afford to wait and see how this will impact their funding for financial aid, critical research, and teaching.

Click here for a snapshot of how giving supports higher education in the U.S.

 


CASE Position

CASE supports preserving the full value of the charitable deduction and the enactment of a universal charitable deduction. As such, CASE supports the Universal Charitable Giving Act of 2017,  introduced by Rep. Mark Walker (R-NC) in the House and Sen. James Lankford (R-OK) in the Senate and the Charitable Giving Tax Deduction Act (H.R. 5771) introduced by Rep. Chris Smith (R-NJ) and Henry Cuellar (D-TX).


Resources

Updated May 16, 2018