During both the 113th and the 114th Congresses, House and Senate lawmakers have undertaken several efforts to review and comprehensively reform the federal tax code, and further work on this issue is expected in the 115th Congress.
Comprehensive tax reform has the potential to impact charitable organizations, which must adhere to the regulations in the U.S. tax code in order to qualify for tax-exempt status. In proposals for tax reform legislation, lawmakers have suggested changes to charitable giving provisions in the current tax system.
Notably, in December 2014, outgoing House Ways and Means Committee Chair Dave Camp (R-MI) formally introduced the Tax Reform Act of 2014 (H.R. 1), which included a two percent floor for charitable donations to qualify for a deduction. In June 2016, the House Republican Tax Reform Task Force, led by Ways and Means Chair Kevin Brady (R-TX), released A Better Way: Tax Reform, a blueprint for forthcoming comprehensive tax reform legislation which incorporated some of the thinking behind Camp’s bill. The blueprint proposes that such legislation: retain the charitable deduction, but significantly raise the standard deduction and reduce the number of itemizers to roughly 5% of taxpayers from 33%; continue to limit the use of the charitable deduction to itemizers; and repeal the federal estate tax.
During the 2016 Presidential elections, Independent Sector analyzed the tax plans of the two major party candidates. Given the potential for even proposed tax reform measures to shape the opinions and decisions of policymakers for years to come, Independent Sector carefully analyzes such proposals through the lens of our Board of Directors’ Guiding Principles on Deficit Reduction and Tax Reform and engages with lawmakers on an ongoing basis to ensure that the tax code will continue to both encourage and enable taxpayers to donate to charitable causes.