Massachusetts Universal Charitable Deduction Kicks in 23 Years After Enactment

From our friends at the Nonprofit Times:

You might forgive Massachusetts nonprofit leaders for thinking they might be waiting for Godot. The Bay State’s universal charitable deduction was overwhelmingly passed by voters in 2000 before being paused amid economic concerns two years later. The measure was on the cusp of returning in 2020 just as the pandemic hit and the tax break was paused again.  As of January 1, finally, the state charitable deduction is back in effect. Cue Didi and Gogo.

The provision was to kick in when the income tax rate dropped to 5%, which occurred in January 2020 – just before the COVID-19 pandemic was declared. Then-Gov. Charlie Baker vetoed a one-year delay in the state charitable deduction, which had been supported by The Massachusetts Nonprofit Network (MNN), but was overridden by the state’s legislature in August 2021. That pushed the start date for the deduction to January 1, 2023.  MNN estimates that a charitable deduction would benefit more than 600,000 low- and middle-income donors in the Bay State.

The state’s Department of Revenue estimates the charitable deduction would cost the state some $300 million while generating $6 billion in giving and deductions statewide.  At the federal level, there’s been a push for years by nonprofits to get a universal charitable deduction that would allow non-itemizers to write off their deduction. A temporary measure was included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in December 2020. Taxpayers could deduct up to $300 for cash contributions to charities, a provision that expired at the end of 2021.

I don’t know.  This seems like such a no-brainer at the federal level.  Pay $300 million, get $6 billion.  That is a rate of return of . . . well, let’s see . . . uhhh . . . just forget it, its a pretty high rate of return ok?!  It doesn’t take a Ph.D in Differential Calculus to see that.  

darryll jones