Americans enjoy supporting the causes they care about. According to Giving USA 2018: The Annual Report on Philanthropy for the Year 2017, contributions from individuals comprised 70% of the $410 billion donated to charity in the U.S.*
The evolving tax landscape could impact how individuals approach charitable giving going forward. Below is a summary of some tax changes to keep in mind.
The standard deduction nearly doubled for the 2018 tax year under the Tax Cuts and Jobs Act. Additionally, these deductions are increasing for tax year 2019. Fewer Americans are expected to itemize their deductions as a result of the changes.
Here are the new standard deduction amounts**:
- Single or Married Filing Separately: $12,200 (an increase of $200 vs. the 2018 tax year)
- Head of Household: $18,350 (an increase of $350 vs. the 2018 tax year)
- Married Filing Jointly: $24,400 (an increase of $400 vs. the 2018 tax year)
Taxpayers can only deduct charitable contributions when itemizing deductions. Those who are able to itemize can deduct their charitable contributions made to qualified organizations. The new tax laws increased the deduction limit for cash contributions from 50% to 60% of one’s adjusted gross income (AGI).
These are just a few of the many changes in U.S. tax law. With the changes now in effect, the initial impact on charitable giving may be seen after Americans file their 2018 tax returns this April.
Disclaimer: Bright Funds Inc. does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax advisor before acting on this information. Bright Funds also makes no representations as to the completeness or accuracy of information contained on third party websites listed as sources.
*Giving USA 2018: The Annual Report on Philanthropy for the Year 2017
**IRS provides tax inflation adjustments for tax year 2019
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