With the increase in the standard deduction in the big Tax Bill in 2017 and again in the One Big Beautiful Bill last year (See Ready Reference Page: “One Big Bill Beautiful for Some”), very few taxpayers actually itemize their deductions these days. Why should we care whether a charitable gift is actually deductible or what donors have to do to report it if it is? The great majority of donors don’t really care? —From our recent webinar.
You are correct that Congress increased the standard deduction for married couples filing jointly from $12,700 in 2017 to $24,500 in 2018, and up to $31,500 in 2025 (indexed for inflation going forward). After the 2017 increase, only about 8% of all individual taxpayers itemized their deductions. We don’t yet know how much that number will decrease after the latest increase.
We do know, however, that those who still itemize are usually in a position to make substantial gifts to charity. Some would call them “transformational” gifts. There was clearly a shift in emphasis for fundraisers seeking gifts from the itemizers after the 2017 Tax Bill. Since that’s where the big money is, that’s where fundraisers are likely to continue to focus their major efforts and will need to understand how their donors can obtain the maximum tax advantage available.
But the Big Bill now allows the more than 92% of taxpayers who don’t itemize deductions to claim a charitable contribution deduction up to $1000 per taxpayer each year. The gifts have to be made in “cash,” (including checks, credit cards, Venmo, etc.) and gifts to most private foundations, supporting organizations and donor advised funds won’t be eligible for the deduction.
But the donors of qualifying gifts will be required to obtain a contemporaneous written acknowledgment from the charitable recipient for gifts of $250 or more, including a statement whether goods or services have been received in return, and, if so, the value of those gifts and services.. (See Ready Reference Page: “IRS Requires Substantiation of Gifts”) For “quid pro quo” gifts of more than $75, the charity must explain the value of the goods or services received in return. This will cover the tickets to most annual fundraising events, and purchases at charitable auctions at those events. (See Ready Reference Page: “Charities Must Set Value of ‘Quid Pro Quo’ Gifts”)
Stuff that nobody cared about in 2024 will now be important for most of your donors. Be sure you are in a position to help them secure the deductions to which they are entitled.
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