After clearing the final hurdle in the U.S. House of Representatives earlier this week, the tax bill has received President Trump's signature. And the new law could have a sizable impact on nonprofits.
For months, charitable organizations, including JUF and the Jewish Federation of North America, raised concerns about the impact proposed changes would have on charitable giving. In the final bill, itemized deductions for charitable contributions remains in place. However, the doubling of the standard deduction, as well as limits on a number of other itemized deductions including state and local taxes, will likely reduce the percentage of taxpayers who itemize their deductions and benefit from a tax deduction for charitable giving from 30 percent to 5 percent.
These changes will result in what the nonpartisan Tax Policy Center estimates to be an annual loss of $12 billion to $20 billion in charitable giving starting in 2018. JUF, along with JFNA and other coalition partners, had actively advocated for a "universal" or non-itemizer charitable deduction, which would have allowed anyone to get a tax deduction for charitable giving.
"Although we are pleased that Congress chose to preserve the charitable giving deduction, reducing the number of taxpayers who itemize takes away, for some, the incentive to give to charities," said JUF Government Affairs Committee Chair David Golder. "At a time when federal funding for many health and human services programs is on the chopping block, charitable giving is critical to organizations, including JUF and its affiliated agencies, as they carry out their missions and provide needed services to the most vulnerable people in our community."
The final bill does not include an earlier proposal that would have weakened the so-called Johnson Amendment by permitting houses of worship and other public charities from endorsing or opposing candidates for public office in the ordinary course of business and if only de minimis expenses were incurred. Protecting the Johnson Amendment was an important advocacy priority for JUF.
Lisa Shuger is JUF's assistant vice president of Federal Government Affairs and the director of JUF's Washington D.C. office.