Charitable Giving – Part 1

Several years ago, I wrote an article about charitable giving, and it began with the statement: “We are a generous group of people”. I believe this remains true. In so many conversations with friends and family, I still hear of giving to charitable organizations in many ways, including time, money, and other donations. Today’s article will be Part I of a two-part series on charitable giving and changes to pertinent tax laws.

Since I wrote the last article, there have been changes in our tax laws that impact charitable giving, and these changes are outlined below. What has not changed, however, are the needs in our communities. Organizations that support our communities are still in need of our ongoing support. It’s important that all of us keep that in mind.

In the past, a donation to a qualified charitable organization could be claimed as an income tax deduction on an itemized tax return. The 2017 Tax Cuts and Jobs Act (TCJA) raised the standard deduction resulting in substantially fewer individuals filing an itemized return. For 2022, the standard deduction is $12,950 for individuals, $25,900 for married couples, and $19,400 for heads of household. So, this means that a donation to a qualified charitable organization is no longer specifically claimed as a deduction on many of our tax returns.

The CARES Act enacted in 2020 in response to the COVID pandemic included incentives for individuals to make charitable donations to qualified organizations. Individuals who did not itemize and used the standard deduction could still claim charitable donations to qualified organizations up to $300 for individuals and up to $600 for married couples. These provisions have expired and were not renewed by Congress, and so they are no longer available.

There are a few more tax laws to keep in mind. An individual who files an itemized return may deduct cash contributions to qualified organizations up to 60% of adjusted gross income (AGI). The CARES Act allowed up to 100% of AGI, but that provision has also expired. Donating such a large portion of our annual income is not realistic for most of us, but it’s still worth mentioning. There may be times in our lives when a substantial donation makes sense.

One last point on the tax law issue. The generous among us certainly includes the businesses in our communities. They play an integral role in supporting our charitable organizations, public institutions, and help raise funds for the large-scale community projects, such as the Walker Public Library. Businesses that are s-corps, LLCs, partnerships, and sole proprietors, referred to as ‘pass-through’ entities, are treated like individuals and may only deduct charitable contributions if the underlying owners file an itemized return. Other corporations (c-corps) may deduct charitable donations up to a certain percentage of their taxable income. Businesses have other ways to support charitable organizations through sponsorships and advertising, the costs for which may be a deductible business expense.

While it may seem that the recent tax laws discourage charitable giving, the opposite may be true. According to an article by Scott Hodge, posted at the, entitled “Would Americans Make Charitable Donations without Tax Incentives?’, “… charitable giving has more than doubled in real terms since 1981, from $137 billion to $327 billion today.” Mr. Hodge suggests that lower marginal tax rates enacted in the past decades, and specifically as part of the 2017 TCJA, have supported the increase in charitable giving by Americans.

Back to my original point, we are a generous group of people. The reason why we give is not solely for the tax deduction, and one way to view the higher standard deduction is that our charitable deductions are already taken into account in part. So, with the tax implications in mind, how can we give? This question will be addressed in Charitable Giving Part II, so please look for that article next week.

Any requests for topic suggestions may be sent to Although we cannot give you legal advice through the column, we can provide some general information that may be helpful for you to know. Our purpose is to educate and we hope that you can take something new away from this column each time you read it. Please consult your legal, tax, and financial advisors to discuss your particular situation.