Tax Reform and Charitable Giving

 

As federal tax reform bills make their way through Congress, you may be wondering how the proposed tax law revisions could affect your charitable giving. Although information regarding these potential tax law revisions is limited, the Office of University Advancement has compiled a brief summary of the current tax proposals that could impact charitable giving.  

There is no way to predict if or when these proposed tax law revisions will be adopted. However, keep in mind that making your donations this calendar year will allow you to take advantage of the current tax benefits for charitable giving. If you are not sure how to allocate your gift, you may want to consider a donor advised fund, charitable lead trust, and charitable remainder trust or gift annuity. These gift planning vehicles allow you to make a gift in 2017 – locking in the current tax benefits – with the option to determine at a future date how you want your gift allocated.  

For more information, please contact our Executive Director of Gift and Estate Planning, Steve Grourke at 610-519-3587 or stephen.grourke@villanova.edu.

 

Tax Reform Summary 
 

The House bill aims to simplify the tax code by reducing the number of tax brackets. The Senate bill would keep the current number of tax brackets but decrease the overall tax rates in each bracket and reduce the highest marginal income tax rate from 39.6 to 38.5 percent. These changes will provide fewer tax benefits for donations, because tax savings from charitable gifts are a function of the tax rate in an individual’s bracket.  

The House and Senate bills would both eliminate certain restrictions on the amount of charitable deductions for people above a certain income threshold. This would provide greater tax benefits for gifts to charities for people with higher incomes. The standard deduction for all taxes would increase to $12,000 for individuals (up from $6,350) and $24,000 for married couples (up from $12,700).

The House and Senate bills would both increase the share of income that people can offset by deducting gifts of cash to charities. Currently, taxpayers can offset up to 50 percent of their adjusted gross income by deducting cash donations to charities. The new limit would be 60 percent. This would provide greater tax benefits for cash gifts.  

Under both the House and Senate bills, the estate tax exclusion would be doubled. This would limit the number of estates that would have tax benefits from charitable gifts. Under the House bill, the estate tax would be repealed after 2023, thus providing no tax benefit for charitable gifts from large estates.  

Under both the House and Senate bills, gifts that provide rights to purchase priority seating tickets to college athletic events would no longer be deductible. This would eliminate the tax benefits for gifts that provide priority ticket-purchasing rights.  

Under both the House and Senate bills, the corporate income tax would be reduced from 35 percent to 20 percent.  The House bill makes this change immediately; the Senate bill would delay this change until 2019.  This would provide substantially fewer tax benefits for charitable gifts from corporations.  

The information shared above is not intended to be legal, accounting or professional advice. Villanova encourages its donors to engage the services of an appropriate professional advisor when planning a charitable gift with tax and/or other financial implications.  

Updated: December 4, 2017

Matching Gifts

Many employers sponsor matching gift programs and will match any charitable contributions made by their employees.

If your company is eligible, request a matching gift form from your employer, and send it completed and signed with your gift. We will do the rest. The impact of your gift to our school may be doubled or possibly tripled! Some companies match gifts made by retirees and/or spouses.