Charities fret over donation incentives

New tax law eliminates advantages of giving except for filers who itemize

WASHINGTON — Traditionally generous Americans may have less incentive to give to charitable causes next year because of the newly minted tax law. The changes that will make it less advantageous for many people to donate to charity in 2018 may be sparking a year-end stream of fattened contributions in anticipation, charity executives and experts say.

Starting next year, the millions of relatively small donations from moderate-income people to mainstream charities could be sharply reduced, they say. That means charity could become less of a middle-class enterprise and a more exclusive domain of the wealthy, who tend to give to arts and cultural institutions, research facilities and universities. Their use of the charitable tax deduction is less likely to be affected by the new law.

The sweeping Republican tax overhaul doesn’t eliminate or even reduce the deduction for donations to charitable, religious and other nonprofit organizations. But it might as well have, charity experts and advocates say.

A central pillar of the massive tax law doubles the standard deduction used by two-thirds of Americans, to $12,000 for individuals and $24,000 for married couples. That means many taxpayers who now itemize deductions will find it’s no longer beneficial for them do so. They’ll find that the deductions they normally take, including for charitable giving, don’t add up to as much as the new standard amount.

The result: Some estimates project that as few as 10 percent of taxpayers will continue to itemize deductions on their returns, down from the current one-third.

By contrast, the wealthiest Americans likely will continue to receive the tax benefit of using itemized deductions, including for charitable giving.

Especially for people who currently itemize and donate small-to-moderate amounts to charities, the tax incentive to give diminishes. And with the new law kicking in Jan. 1, they may want to max out their donations before year’s end.

MARK MORAN/THE CITIZENS VOICE/AP A patron donates money in a Salvation Army kettle in Wilkes-Barre, Pa. Charities are worried because a popular tax deduction for charitable donations will lose its punch under the new tax law.