On Tuesday, March 9, a bipartisan coalition of U.S. Senators and Representatives introduced the Universal Giving Pandemic Response and Recovery Act (S. 618, H.R. 1704), a piece of legislation that would expand charitable giving by reducing the overall cost of giving for taxpayers.
This bill would amend the Internal Revenue Code of 1986, modifying and extending the deductions for charitable contributions for individuals who do not itemize deductions. This would primarily assist lower- to middle-income givers and the churches, ministries, and other non-profits they support.
“Nonprofits are on the front lines of this crisis, but as demand for their services soars, many of these organizations are struggling to keep their doors open,” said Senator Klobuchar (D-MN). “This bill will expand the universal tax deduction for charitable giving to help nonprofits continue to serve their communities during the pandemic.”
Prior to 2020, taxpayers who itemized on their year-end returns were the only people who were eligible to claim a deduction for their charitable contributions. Only about 1 in 10 taxpayers were itemizing, and those tended to be high-income earners.
In March 2020, Congress passed a pandemic relief package that included a universal charitable deduction (UCD). The UCD added to federal law that for one year, non-itemizing taxpayers could claim a charitable deduction. In March, the UCD was capped at $300. In December, Congress raised the cap to $600 for married couples and extended the UCD through 2021. Albeit temporary, this was the first time in about 35 years that federal law included a charitable deduction for non-itemizers.
“In the last year, we have seen the powerful impact that nonprofits and houses of worship have on our communities and how they continue to help our neighbors in the toughest times. They are the local safety net when families need an extra hand,” said Senator Lankford (R-OK). “In a world that has changed significantly in the last year, we have seen more than ever the need to encourage giving to local nonprofits and houses of worship to support their selfless service to those in need.”
The new Universal Giving Pandemic Response and Recovery Act introduced to Congress last week, would expand on the current UCD by raising the deductions cap to over $4000 for individuals and over $8000 for married couples filing jointly. It would also allow non-itemizers to deduct cash gifts made to donor-advised funds. Under this bill, the UCD would be extended through 2022.
“Christians have always selflessly given their resources, talent, and time to those in need, and they have continued to show that generosity in abundance during the pandemic,” said NRB CEO Troy Miller. “We applaud Congress for this bi-partisan legislation.”
Representatives Chris Pappas (D-NH-01) and Jackie Walorski (R-IN-02) introduced the bill in the U.S. House of Representatives, and Senators James Lankford (R-OK), Chris Coons (D-DE), Mike Lee (R-UT), Jeanne Shaheen (D-NH), Tim Scott (R-SC), Amy Klobuchar (D-MN), Susan Collins (R-ME), and Catherine Cortez Masto (D-NV) introduced the bill in the U.S. Senate.
“People of all means want to be part of the solutions in their community—solutions often driven by charities and houses of worship—but our tax code ignores the giving of most Americans,” said Senator Coons. “If more Americans were acknowledged for and supported in their donations, there would be more giving, period. Our bill, the Universal Giving Pandemic Response Act, would substantially increase the emergency charitable giving incentive to adequately reflect the magnitude of goodwill that so many are showing.”