Senator Tim Scott Proposes to Expand the Charitable Tax Deduction

Posted By: GP McLeer Speaking Together,

Among the many provisions in the Tax Cuts & Jobs Act of 2017 was the increase of the standard deduction. For 2021, those levels are now $12,550 for singles, $18,800 for heads of household, and $25,100 for married filing jointly taxpayers. This expansion of the standard deduction had a few ripple effects, one of which was a concern that it would have a negative impact on charitable giving. By increasing the standard deduction, 30 million less Americans itemized their taxes in 2018, the year the legislation took effect. In short, the raising of the standard deduction raises the threshold at which point the charitable deduction becomes an incentive for many Americans. 

In response to COVID-19 and in recognition of the role nonprofits play in supporting communities, the CARES Act of 2020 created a short-term benefit: a $300 universal charitable deduction that any American can claim (if they donated at least $300 to a nonprofit) on their taxes - regardless of whether or not they itemize their taxes. 

This small deduction was the first step in a long-term request of the nonprofit community to establish a universal charitable tax deduction as permanent law, ideally without any cap.

SC Senator Tim Scott is helping lead another step towards that goal with the introduction of the Universal Pandemic Giving Response & Recovery Act, introduced alongside Senators James Lankford (R-Okla.), Chris Coons (D-Del.), Mike Lee (R-Utah), Jeanne Shaheen (D-N.H.), Amy Klobuchar (D-Minn.), Susan Collins (R-Maine), and Catherine Cortez-Masto (D-Nev.).

The bill would extend and increase the CARES Act provision for 2021 and 2022. Starting with this current tax year, any individual (or join filers) can deduct up to one third (⅓) of the standard deduction that applies to them. For individuals, that would be roughly $4,000, and for joint filers it would be up to around $8,000. 

As Senator Scott said in his press release: “Nonprofits, charities, and houses of worship all across South Carolina and the nation have filled the void that many communities developed during the pandemic,” said Senator Scott. “They have been the hands and feet of their neighborhoods, going into places that need aid the most. I am proud to introduce the bipartisan Universal Giving Pandemic and Recovery Act to ensure those who have helped these organizations give back are not taxed on their generosity.” 

The bill was also supported by Together SC, the National Council of Nonprofits, and many others.  For more information, see the Senator’s release on his website.