When you file your 2018 income taxes, you might notice that the standard deduction has essentially doubled. Exemptions will likely be eliminated and in its place, you might see a larger tax credit per dependent claimed. But it also raises at least one other big question: will you give as much to charity?
All the changes are part of the Republicans’ tax bill passed Wednesday -- 224 to 201 in the United States House.
Republicans say the $1.5 trillion tax cut will boost the economy and benefit the middle class, while Democrats think it’ll only help out corporations. Every single House Democrat, along with 12 Republicans, voted against the overhaul.
One sector that's really worried about the effects is nonprofits. Gian-Carl Casa is head of the Connecticut Nonprofit Alliance, which lobbies for charities. He believes it will deeply impact charitable giving.
“People who take the deduction for charitable contributions contribute to nonprofits at about twice the rate of people that don’t,” Casa said. “So, it’s pretty easy to put together that there’s going to be a significant drop-off of charitable contributions as a result of the bill.”
With taxpayers being able to jump on a higher standard deduction, they’ll have less incentive to itemize their deductions. Therefore, they’d be less likely to give to nonprofits.
Casa said nonprofits have already dealt with enough on the state level, but with the federal revamp on the way, a “perfect storm” is developing.
“It hurts the ability of people to [have the opportunity to make] charitable deductions by eliminating charitable deductions to about 90 percent of filers,” Casa said. “And on top of that, it adds about $1 trillion to the federal deficit.”
Casa said no matter what, the fight for funding nonprofits will continue.
