San Francisco Chronicle

Tax overhaul likely to cause drop in charity donations

- By Marcy Gordon Marcy Gordon is an Associated Press writer.

WASHINGTON — In this season of giving, charity seems to be getting an extra jolt because next year the popular tax deduction for donations will lose a lot of its punch.

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. Charitable giving should be encouraged with a tax incentive, congressio­nal Republican­s crafting the plan said early on, and the cherished deduction — though costing some $41.5 billion a year in lost federal revenue — wasn’t struck.

But it might as well have been, charity experts and advocates say.

A central pillar of the huge 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 probaby will continue to receive the tax benefit of using itemized deductions, including for charitable giving.

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