Members of Congress rang in the New Year from their offices on Capitol Hill as brinksmanship brought the nation to the very edge of the so-called “fiscal cliff.” After weeks of pleas by NRB and others to protect charitable giving, the last–minute deal that was brokered happily did not directly diminish the charitable tax deduction through such sweeping proposals as a 28 percent deduction value limit or a deductions dollar cap. However, the revival of a formerly phased-out rule, the “Pease” limitation, may well affect charitable giving as it cements a surcharge of 3 percent of adjusted gross income over $250,000 for individuals ($300,000 for joint filers) against the total itemized deductions of high income earners.
Notably, the “fiscal cliff” deal extended until December 31, 2013, a provision allowing tax-free distributions to charities from IRA’s held by individuals age 70½ or older of up to $100,000 per taxpayer, per taxable year. Also extended were provisions allowing for businesses to claim an enhanced deduction for contribution of food inventory, for basis adjustments for S-corporation stockholders that donate property to charity, and for film and television producers to expense the first $15 million of production costs incurred in the United States ($20 million if incurred in economically depressed areas of the U.S.).
This New Year’s battle is only the beginning of fiscal debates in 2013, as a new deadline to raise America’s debt limit draws near in the next couple of months, a federal agency budget “sequester” has only been delayed two months, and efforts at comprehensive tax reform continue to be pressed. NRB will continue to urge Congress to steer clear of proposals that would diminish the charitable tax deduction. Indeed, as NRB President & CEO Dr. Frank Wright stated in letters to Congress in December, “Rather than capping or otherwise constraining this longstanding deduction, the federal government ought to expand opportunities for the charitable impulse of Americans to thrive.”
By Aaron Mercer, Vice President Government Relations
Published January 4, 2013