Senators offer bill to expand charitable giving tax break

A bipartisan group of senators this week introduced a bill to expand a tax break for charitable giving in an effort to encourage donations to nonprofits amid the coronavirus pandemic.

The $2.2 trillion coronavirus relief law that President Trump signed on March 27 created a charitable contribution deduction for 2020 of up to $300 for taxpayers who don’t itemize their deductions. The senators’ bill would build upon that, allowing those who don’t itemize to get a charitable contribution deduction of up to onethird of the standard deduction for the 2019 and 2020 tax years. That means that the maximum deduction amounts would be just over $4,000 for individuals and just over $8,000 for married couples.

“This proposal incentivizes additional giving during a time of crisis in our nation,” Sen. James Lankford (R-Okla.), the lead sponsor of the bill, said in a news release. “I am proud of the incredible work our bipartisan group of senators has done to help ease the federal tax burden for those who give to charities.”

Lankford introduced the bill along with Sens. Christopher Coons (D-Del.), Mike Lee (R-Utah), Jeanne Shaheen (D-N.H.), Tim Scott (R-S.C.) and Amy Klobuchar (D-Minn.).

Charities have been seeking assistance during the pandemic. They’ve said that many nonprofits have seen greater need for their services, but they’ve also had to close some programs and expect to see a decline in donations.

The late March CARES Act includes several provisions aimed at helping nonprofits. In addition to the $300 above-the-line deduction, the law also increases limits on charitable tax deductions for individuals who itemize and corporations, and it allows nonprofits with tax-exempt status under Section 501(c)(3) of the tax code to get loans under the Paycheck Protection Program.

The senators’ bill aims to help charities further. They are also aiming to provide more tax relief for people who donate to charity but don’t itemize their taxes, noting that they typically have lower incomes than those who itemize.

“As we face three national crises — a pandemic, recession, and the wounds of structural racism — Americans have responded with a tremendous spirit of generosity,” Coons said. “People of all means are trying to help by giving what they can to help our nation heal and recover, but there’s a divide among Americans who give.”

Under the senators’ bill, people who make donations this year prior to the tax-filing deadline of July 15 would be able to claim those deductions on their 2019 tax return. People who have already filed their 2019 return would be able to amend their returns to benefit from the enhancements to the charitable deduction in the bill.

Nonprofits and their advocates praised the senators’ bill.

“Allowing all Americans to deduct their charitable giving, up to about $8,000 for a married couple, in both 2019 and 2020 will encourage Americans to give more money away, putting it into the hands of organizations that are delivering critical services during the current crises,” said Sandra Swirski, executive director of Alliance for Charitable Reform.

Nonprofits and some lawmakers had been pushing for an above-the-line charitable contributions deduction even before the coronavirus pandemic, expressing concerns that Trump’s 2017 tax-cut law would hurt giving because it reduced the number of people who itemize.

Report findings released last week by the Giving USA Foundation found that charitable giving increased in 2019. The foundation’s chairman said that it was too soon to say what the 2019 data will mean in the current environment.