Organizations in the nonprofit and philanthropic spaces are closely monitoring the progress of the Charitable Act, a significant legislative development with potential impacts on charitable contributions. This proposed legislation, if enacted, would enable taxpayers to claim deductions for a portion of their charitable donations that exceed the standard deduction.

Introduced in early 2023, this initiative aims to counteract a reduction in donations by approximately 21 million households, a trend triggered by the increased standard deduction set in 2017. This prospective law draws inspiration from a similar regulation during the pandemic, which allowed non-itemizers to claim deductions up to $300 more than the standard deduction for charitable contributions. This “universal charitable deduction” was increased to $600 per individual in 2021, but the provision then lapsed.

In the present version of the proposal, individuals filing singly could deduct up to $4,600 (or $9,200 for couples filing jointly) beyond the standard deduction initially, with future deductions pegged at about one-third of the standard deduction. Surveys reveal widespread public support for this expansion, and financial projections suggest it could boost charitable donations annually by $17 billion. The proposal enjoys cross-party endorsement in the Senate.

Educating donors about the Charitable Act’s importance this giving season can enhance their understanding of its significance and spur them to contact their legislators. This effort to inform donors not only empowers them but also strengthens the collective support for philanthropy, reinforcing the community’s commitment to charitable giving.