Republican Sen. James Lankford from Oklahoma seeks to increase the tax deduction for charitable giving in legislation introduced on Monday.
“This proposal incentivizes additional giving during a time of crisis in our nation,” the senator said when introducing the bill. “Our nation’s charities help millions of people both in Oklahoma and across the nation access food, shelter, clothes, employment assistance, and mental and physical health services without forcing them to wait on the government.”
The legislation, called the Universal Giving Pandemic Response Act, would increase the $300 above-the-line deduction that is currently in law. “Above the line” means it can still be claimed by taxpayers who do not itemize their deduction and instead take the standard deduction.
The bill would raise the above-the-line deduction for charitable giving to one-third of the standard deduction, which is about $4,000 for individual filers and $8,000 for married joint filers. The increased deduction would be available for the 2019 and 2020 tax years.
Lankford’s bill applies to donations to charities, houses of worship, religious organizations, and other nonprofit organizations. Its introduction comes as this sector tries to make permanent the temporary $300 above-the-line deduction for charitable giving that Congress enacted for this year in the March CARES Act pandemic relief bill.
The nonprofit sector has fought for years to broaden the tax break to filers who don’t itemize their tax deductions by allowing them to claim an above-the-line deduction for their donations. That effort went into overdrive after the 2017 tax overhaul bill increased the standard deduction, which many feared would make the charitable giving tax deduction less attractive as tax filers no longer had to make donations to lower their tax bills.
That outcome does not appear to be the case, according to the Treasury Department. It reported on Friday that U.S. charitable donations in 2019 were nearly a half-trillion dollars and “marked the highest contributions ever,” suggesting that concerns over doubling the standard deduction would decrease charitable giving were likely unfounded.
The Treasury Department relies on data from Giving USA, which is an annual report on charitable giving that is compiled by the Indiana University Lilly Family School of Philanthropy.
The report found that individuals, bequests, foundations, and corporations gave an estimated $449.64 billion to U.S. charities last year. That’s a 4.2% increase from 2018, when contributions totaled $431.43 billion.
A bipartisan contingent of senators backs the bill that Lankford introduced. The list includes Democrats, such as Chris Coons from Delaware, Amy Klobuchar from Minnesota, and Jeanne Shaheen from New Hampshire, as well as Republicans, such as Mike Lee from Utah and Tim Scott from South Carolina.
Lankford, along with independent Sen. Angus King from Maine, sent a letter last month to Senate leaders asking them to include the bill in future coronavirus relief packages. The Senate is not expected to pass additional aid until mid-July, according to Sen. John Thune from South Dakota, the second-highest-ranking Republican in the upper chamber.
