By Mark Hager.
The US tax code gives individuals a choice between either itemizing their outlays – including charitable donations – that can be deducted from their taxable income, or taking a flat “standard deduction,” which reduces the paperwork. In 2018, changes in the tax code doubled the standard deduction, cutting the financial incentive for all but the wealthiest Americans to make charitable donations. Giving declined. This affects the bottom line of the nonprofit organizations that rely on donations.
The Biden Administration should revisit this dimension of tax law and restore the incentive for more Americans to itemize deductions, including contributions made to nonprofits.
Mark Hager is an Associate Professor and current Director of Graduate Studies in Nonprofit Leadership and Management at the School of Community Resources and Development at Arizona State University. Hager is on LinkedIn and Twitter. Photo of Phoenix, Arizona, is courtesy of James Day and Unsplash.
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