NCPA - National Center for Policy Analysis

Tax Breaks for Charitable Giving

August 14, 2003

Congress may provide some new incentives to donate to charity, says the Wall Street Journal. The Ways and Means Committee of the U.S. House of Representatives is expected to consider tax breaks for charitable giving soon, and the Senate has already passed the "Care Act of 2003." Among its provisions:

  • The Senate bill would allow taxpayers who take the standard deduction to also deduct a portion of their charitable gifts -- nearly two-thirds of all taxpayers take the standard deduction each year and thus can't deduct any of their donations.
  • It would also allow savers 70-and-one-half-years old or older to make tax-free distributions from their individual retirement accounts for charitable purposes -- such as donating any or all of his Individual Retirement Account to a qualified charity without having to pay federal income taxes on the withdrawal.
  • The IRA proposal, if enacted, would reduce tax revenues by nearly $3 billion over the next decade, according to estimates by the Joint Committee on Taxation.
  • Another provision would permit distributions to a "split-interest entity," meaning a charitable remainder trust, pooled income fund or charitable gift annuity for taxpayers at least 59-and-a-half-years old.

Under the Senate bill, the provision allowing a charitable contribution for nonitemizers would be effective for 2003 and 2004 only.

The maximum amount of deductions would be $500 for a married couple filing jointly and $250 for most individuals. The deduction would apply only to the extent that contributions exceed $500 for married couples filing jointly, or $250 for singles.

Source: Tom Herman, "Bill May Inspire Gifts to Charity," Personal Journal, Wall Street Journal, August 14, 2003; see also "JCX-47-03,"Technical Explanation Of The Revenue Provisions Of S.476, The 'Care Act Of 2003,' As Passed By The Senate," JCX 47-03, May 12, 2003, Joint Committee on Taxation.

For text (WSJ subscription required),,SB106080742083714800,00.html

For JCT Care report


Browse more articles on Tax and Spending Issues