An Incentive to Help
THE 2017 TAX CUTS and Jobs Act doubled the standard deduction. It���s estimated that 90% of households took the standard deduction in 2018, rather than itemizing, up from 69% in 2017.
The tax-code overhaul essentially means it costs more to donate to your favorite qualifying charities���unless you���re among the 10% whose itemized deductions exceed their standard deduction. To be sure, we shouldn���t give to charity solely for the potential tax benefit. Even if you itemize and hence you can deduct your gift, you���ll still be out of pocket.
That said, for those of us who claim the standard deduction, there is an added financial incentive to give in 2021. If you make a $300 cash donation by Dec. 31, you can take a deduction on your tax return���even if you don���t itemize. A similar write-off was put in place by the CARES Act for the 2020 tax year.
Say you���re in the 22% marginal tax bracket. A $300 charitable contribution means you���ll save $66 in taxes. Nobody���s going to retire on that windfall. But perhaps you can use it as an excuse to enjoy a (thrifty) date night. Alternatively, you might add the amount of the tax break to your donation, so you give even more to your favorite nonprofit.
Some additional good news: If you���re married filing jointly, you can get double the deduction with a $600 donation. That���s an increase from last year, when couples were limited to $300.
The tax-code overhaul essentially means it costs more to donate to your favorite qualifying charities���unless you���re among the 10% whose itemized deductions exceed their standard deduction. To be sure, we shouldn���t give to charity solely for the potential tax benefit. Even if you itemize and hence you can deduct your gift, you���ll still be out of pocket.
That said, for those of us who claim the standard deduction, there is an added financial incentive to give in 2021. If you make a $300 cash donation by Dec. 31, you can take a deduction on your tax return���even if you don���t itemize. A similar write-off was put in place by the CARES Act for the 2020 tax year.
Say you���re in the 22% marginal tax bracket. A $300 charitable contribution means you���ll save $66 in taxes. Nobody���s going to retire on that windfall. But perhaps you can use it as an excuse to enjoy a (thrifty) date night. Alternatively, you might add the amount of the tax break to your donation, so you give even more to your favorite nonprofit.
Some additional good news: If you���re married filing jointly, you can get double the deduction with a $600 donation. That���s an increase from last year, when couples were limited to $300.
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