When the new tax law was signed by President Trump most experts viewed it as detrimental to future charitable donations and deductions. The significantly increased standard deduction meant fewer taxpayers needed to file an itemized income tax return and non-itemizers would not benefit from a charitable tax deduction.
While the value of a charitable deduction may have decreased in value for individuals that reside in states without a state income tax it has increased in value for individuals that reside in states with a state income tax. Under the new tax law, the deduction for state income taxes is limited to $10,000. While a charitable gift may not result in any reduction in state income taxes it can provide a deduction for federal income tax purposes. Utilizing a charitable gift deduction, after maximizing the amount of your state income tax deduction, can decrease the amount of federal income tax due and owing for those who do not file an itemized income tax return.
In addition, under the new tax law, the donation of appreciated stocks, bonds or other assets still avoided capital gains taxes regardless of whether or not the donor itemizes. Individuals age 70 ½ or older also retained the ability to make a charitable donate directly from their IRA.
