The current economy is doing great, and the stock market keeps setting new record highs. So, why are charitable contribution by individuals down by 3.8%?
The Trump Tax Cut doubled the standard deduction to $24,400 for married couples. Unless regular itemized deductions plus charitable deductions exceed that amount, a taxpayer is better off taking the standard deduction and saving the money normally given to charity. After all, why give the money to charity if you don’t get a tax deduction for it? The percentage of taxpayers itemizing their deductions just dropped from 31% to only 14%. That means more than half of taxpayers lost tax deductions for charitable contributions, unless total itemized deductions exceed the standard deduction. (Also, the lower tax rate makes charitable deduction less valuable to taxpayers.)
We’re approaching that time of year when charities make their strongest pleas for money. Maybe, we should listen to them more closely this year and open our wallets just a little more – at least 3.8% more!
Yes, you can afford it! Have you looked at the stock market lately?