Income Tax

The New Tax Law and Charitable Giving

Article Type: News

Now that the Tax Cuts and Jobs Act has passed, we know several provisions that may affect the tax implications of your charitable giving. Here are some of the key changes…

1. Increase in the standard deduction for all tax filers.

The standard deduction has been raised to $12,000 for individuals and $24,000 for married couples. If your total giving is less than the standard deduction, this eliminates the need for you to worry about itemized deductions or charitable receipts when you file your taxes. You’ll receive this benefit automatically.

2. Increase in charitable deduction limitation.

If your support to charitable causes exceeds the standard deduction, this may provide you with additional tax benefits. In the past, you were limited to deducting up to 50 percent of your adjusted gross income for cash gifts in any one year. The new tax bill increases that amount to 60 percent. Gifts of appreciated assets are still limited to 30 percent of your adjusted gross income.

3. Increase in estate tax exclusions.

The estate tax exclusion amount has been increased to $11,200,000 for individuals and $22,400,000 for married couples, a level at which 99 percent of Americans will have no federal estate tax to pay. This provision remains in effect through the end of 2025. This means that you no longer need to worry about estate tax when considering the legacy you wish to leave for your family and the ministries close to your heart. 

Opportunities for you

In light of the new tax bill, here are some opportunities you should consider…

  1. If you are over 70 ½, IRA gifts are tax-smart gifts. They reduce your taxable income, whether or not you itemize your deductions.
  2. Gifts of inventory or commodities also make excellent gifts, since they also reduce taxable income.
  3. Appreciated asset gifts remain excellent opportunities since they help you avoid capital gain income (as well as provide a charitable deduction if you itemize).
  4. Life income gifts like charitable gift annuities and charitable remainder trusts continue to be great ways to support your favorite ministries while receiving income for life.
  5. If your taxes are now reduced, you have more disposable income. This provides you with additional cash flow for charitable giving and other discretionary spending.

Talk with a Planner

To have a confidential conversation with someone who understands tax-wise charitable planning from a distinctly Christian worldview, contact Barnabas Foundation at 888.448.3040 by using the contact form below.