Tis’ the season of giving, and it appears that Congress has delivered a gift to individual taxpayers and the charitable sector this week. While negotiating a budget deal to keep the government open, lawmakers were also negotiating the extension of a number of tax provisions (52 to be exact), which were set to expire at the end of the year. The tax agreement passed the House on Thursday. The Senate is likely to pass the bill on Friday. Some of the provisions in the agreement were made permanent while others would be reinstated through 2019, reinstated through 2016, or phased out over time.
The following permanent provisions should be of interest to Goodwill® advocates:
- For Donors – Charitable giving incentives: The nonprofit sector united to push for making permanent three major incentives
- 1) taxpayers over 70 ½ years of age may make donations directly from an IRA and will not be taxed on the amounts (up to $100,000) (also known as the IRA rollover)
- 2) the bill expands and enhances the deduction for property donated for conservation purposes
- 3) the bill expands and enhances the deduction for donations of excess food inventory.
- For Low-Income Families – Enhanced earned income credit: Also known as the Earned Income Tax Credit (EITC), this credit was slated to expire in 2017. Seen as a valuable refundable incentive for low-income families and supported by Goodwill, the deal will make permanent the enhanced credit for families with three or more children and increased phase-out range for married couples filing jointly.
- For Students – Enhanced American opportunity tax credit: From 2009 through 2017, taxpayers have been entitled to a $2,500 credit for four years of post-secondary education, with phase-outs beginning at $80,000 (if single) and $160,000 (if married filing jointly). In 2017, however, the credit was slated to return to an $1,800 annual maximum with lower phase-out thresholds. This deal makes the enhanced credit permanent.
- For Parents – Enhanced child tax credit: Since 2009 parents have been entitled to an additional refundable credit equal to 15 percent of earned income in excess of $3,000 in addition to a $1,000 credit per qualifying child. This threshold would have jumped back to $10,000 beginning in 2017; however, the lower threshold was made permanent as part of the deal.
While the deal is not done yet, the tireless work of advocates like you is what led to Congress recognizing the value of these provisions and particularly the importance of charitable giving to the sector. Goodwill will continue to update our advocates on other areas where we need your support as we continue to advance our priorities. Be sure to register in GII’s Legislative Action Center to receive the latest updates and alerts.