How the New Tax Plan Will Affect Charitable Giving
Planned Giving – By Rachel Calderon
Lately everyone is talking about the changes in the new tax plan approved by Congress — and the affect they could have on gifts to charitable organizations. At Central Florida Foundation, we’ve been following the updates closely. Let’s take a look at the four main changes that deal with charitable giving:
- The standard deduction was raised to $12,000 for individuals or $24,000 for couples, making it less likely that people will itemize.
- Now, people in the lower tax brackets won’t need to make charitable gifts to receive a deduction.
- The estate tax, which provides an incentive for the wealthy to give to charity to reduce their tax burden, was maintained. The exemption was doubled to about $11 million for individuals and $22 million for couples, shielding all but the ultra-wealthy from the levy. However, this is temporary from 2018 to 2025.
- Donors are able to receive a deduction of up to 60 percent of their adjusted gross income, an increase from the current limit of 50 percent.
With all this in mind, the question is whether people will continue to give without the tax benefit – to which we answer a resounding “yes.” Time and time again, studies have shown that people usually give from the heart and not solely because of the tax deduction. That benefit is an incentive but rarely the main reason.
Now is the time to connect your philanthropy to strategy and make your contributions go further. How much you give is not as important as what you can help make happen. This is an area where Central Florida Foundation can help.
If a tax deduction is important to you, and you’ll be giving at a rate above the standard deduction, the key would be to ramp up your charitable giving now, or do more every other year. Either of these strategies fits well with a donor-advised fund, which enables you to receive the tax benefit now and make giving decisions later.
If you have had an estate plan put together by a professional adviser in the past, now is the time to have it reviewed to make sure it still serves you well under the new law. Need a referral to a qualified professional advisor? We can help.
During this first year under the tax changes, we will all be “trying it on” to see how it goes. Just remember, professional advisers across the country are developing strategies to help their clients, and charitable organizations will also have new donation strategies to help you and your family make your giving matter.by