How does the tax cut and job act affect giving in churches
When the Tax Cuts and Jobs Act tax plan was passed by the Trump Administration in December of 2017, it increased the standard deduction people could claim on their taxes to just about double of what it was the previous years.
What does this mean?
In a nut shell it means that the standard deductions that all tax payers are entitled to has increased
• Standard deduction (previously): About $13,000 for married couples and $6,500 for a single person
• Itemized deduction amount: Adding together expenses you paid, such as tax mortgage interest, state and local taxes, medical and dental expenses, charitable gifts and donations, etc. This is either greater than or less than $13,000 for married couples/$6,500 for single people
When the amount of itemized deductions exceeds the total standard deductions then most people would choose this route instead of the standard deduction to increase their adjusted gross income.
With these changes and increased standard deductions it is possible that in 2019, more people will choose standard deductions instead of itemized deductions, since it will be much harder for all your itemized deductions to be greater than $24,400 for married couples or $12,200 for single people.
How will this affect churches?
This leaves the question of whether people are motivated to donate to churches in order to include those charitable contributions in their itemized deductions list.
If the motivation to give is to increase their tax liabilities the conclusion some experts are making is that fewer people will donate because the standard deductions are greater than what was donated. Other experts are stating that people do not give to religious organizations solely for the tax benefit, and so nothing will change.
Whether charitable contributions will decrease or stay the same is a hot button topic, so it is now more important than ever for your organization to start monitoring donations for the upcoming year.