Revised deduction bill excludes charity giving

Legislation that would cap itemized deductions on state tax returns now excludes charitable giving from the limit.

The latest version of the bill came about after concerns were expressed by nonprofits to carve out donations. The new bill, House Bill 2403, still caps the amount of deductions that can be claimed to $17,000 per year for the next three tax seasons.

Itemized deductions are useful in lowering a person’s tax bill. Most Oklahomans take the simpler standard deduction, but taxpayers also can choose to identify and separately list each one.

A deduction can be claimed on charitable donations, medical expenses, property taxes, mortgage interest and some other out-of-pocket expenses.

The original bill would have boosted state revenue by an estimated $166 million, but the latest version would draw in $101.8 million, according to an analysis by House staff. The decision by House leadership to re-examine the bill came after 48 hours of heavy pressure from the nonprofit community and others, including the business community.

State Rep. Kyle Hilbert, R-Depew, said the first proposal introduced as the session began this year was a complete elimination of itemized deductions.

“(State Rep. Steve Vaughan), myself and a few others worked hard to come up with some sort of a compromise where we could make that more palatable, and that was where the $17,000 cap idea came from,” said Hilbert. “And this, we exempted charitable contributions to make it even more palatable.”

The bill didn’t earn universal support, however. In the House Joint Committee on Appropriations and Budget, it passed by a vote of 18 to 7.

Oklahoma City Republican Kevin Calvey pointed out that medical expenses would still count against the limit.

“Isn’t this a $100 million tax increase on sick people and homeowners?” Calvey asked.

Hilbert replied that the bill would affect less than 11 percent of Oklahoma taxpayers.

“At the end of the day, we need revenue on the table,” Hilbert said. “We’ve got a long way to go, and this is a chunk of that.”

House Bill 2403 was scheduled for a vote in the Oklahoma Senate committee meeting on Thursday morning, but state Sen. Dan Newberry, R-Tulsa, asked to postpone the vote until Friday.

The reason, he said, was that he wanted the House to vote on the House bill in committee before senators cast their vote.

“I think it’s impractical for the Senate to make a vote on it,” he said. “I think it’s right for the respective house to look at it.”

Newberry said he’s not sure whether he’ll support the bill when it comes back up for a vote.

“It is a legitimate proposal that should be reviewed and taken into consideration,” he said. “This bill may prove to be part of that solution.”