Conclusion
So, did the new tax act reduce the value of charitable tax deductions? The answer, it turns out, is not “Yes.” Instead, the answer is, “It depends.” For some, the value has gone up. For some, it has gone down. These effects are complicated because the people for whom the benefits of giving have gone up (high income, high wealth) are fewer in numbers, but these people generate a disproportionately higher share of charitable dollars. Additionally, lower tax rates and higher standard deductions mean more disposable income. More disposable income means more opportunities for donations. Thus, rather than the new tax law representing a “sky is falling” scenario for charitable giving, it is instead a mixed bag of good and bad.
Russell James, J.D., Ph.D., CFP, is a professor in the Department of Personal Financial Planning, Texas Tech University.