Post-TJCA Charitable Deductions

Yesterday, the Chronicle of Philanthropy reported that both the number of taxpayers who took the charitable deduction and the amount of charitable deduction claimed dropped precipitously from 2017 to 2018. Specifically, in 2017, about 24 percent of taxpayers claimed charitable deductions (for a total of about $147.3 billion). In 2018, the percentage of taxpayers deducting their charitable contributions dropped to 8.5 percent, for a total deducted amount of $93 billion.

I’ll note here that this doesn’t mean that charitable giving dropped 27%. In fact, according to Giving USA, charitable giving in 2018 rose 0.7% in current dollars over giving in 2017 (though it dropped 1.7% when adjusted for inflation). It just means that where, in 2017, 35% of charitable giving was deducted, in 2018, only about 22% was deducted.

The Chronicle reported on the general decrease in taxpayers taking itemized deductions at every income level. I thought I’d look at how post-TCJA charitable deductions compared to pre=TCJA charitable deductions at five different income ranges.

I used the IRS’s Late-May Filing Season Statistics by AGI for 2018 and 2019. Remember, the top-line numbers are that in 2017, 23.73% of tax returns took deductions for charitable giving. In 2018, that dropped to 8.43%.

For taxpayers with less than $50,000 in AGI, deductions dropped from 7.2% in 2017 to 1.82% in 2018.

Between $50,000 and $100,000, the decline was from 33.43% to 10.04%.

Between $100,000 and $250,000, the decline was from 66.96% to 23.81%.

Between $250,000 and $1 million, the decline was from 87.43% to 49.75%.

And above $1 million, the decline was from 86.8% to 67.75%.

Samuel D. Brunson