WASHINGTON—Senators James Lankford (R-Okla.) and Chris Coons (D-Del.) announced on March 1 on Capitol Hill a new bipartisan charitable legislation incentivizing taxpayers to donate more by increasing tax deductions.
The bill would provide taxpayers who do not itemize their tax returns with a reduced deduction for charitable contributions on federal income taxes worth up to one-third of the standard deduction—approximately $4,500 for an individual filer and nearly $9,000 for married joint filers.
In 2023, the standard deductions for single taxpayers and married couples who file separately will be $13,850. And $27,700 for married joint filers.
“There are lots of folks that are non-itemizers that give faithfully and would give even more if they knew it’d be an offset there, and they get engaged with their taxes,” Lankford said.
“We’re talking about encouraging people to do what they love to do already—help people in need,” he continued.
According to Lankford, the first safety net of the country is its family, neighbors, and communities. After that comes nonprofits and religious organizations. And last—the government.
“Government can never keep up with all the needs that we have as Americans,” he explained, “We [the government] are not even designed to be able to do that.”
People contribute out of their own will but would give more when they could write it off on their taxes, Lankford said, pointing out that many taxpayers donate in December.
He said that taxpayers contribute because of the Christmas spirit and because “they also know it’s the end of the year for their tax season.”
“This is a way to give some extra recognition and incentive to those who are often already given,” Coons said.
The Delaware senator said he is “perfectly optimistic” that this bill will end up on President Joe Biden’s desk for him to sign into law.
Taxpayers who donate are usually more involved, he said, by volunteering and referring services to family, friends, and their community.
“Often when folks donate to a nonprofit, they also feel a sense of connection or investment that has positive secondary benefits as well,” Coons said.
While tax policy is seldom why taxpayers donate to nonprofit organizations, Angela Williams, president and CEO of United Way Worldwide, said, continuing that it “can have a powerful ripple effect that will make our country and communities stronger.”
With a global network serving nearly 50 million people in 37 countries, the United Way Worldwide provides families with food, access to education and health care, and assists when natural disasters occur, she said.
“This kind of expansion of the universal charitable deduction will make it easier for all Americans to give,” Williams said.
Previously, taxpayers received a $300 deduction for donating to charities, houses of worship, religious organizations, and other nonprofits.
The Salvation Army has programs helping people “break the cycles of poverty, deal with domestic abuse, addiction, isolation, and homelessness,” Colonel Ralph Bukiewicz said.
“We know that those who support charitable programs also feel the pains of inflation,” he said, “this Act will allow and incentivize them to continue helping others during these challenging times.”