Cap on Charitable Tax Deduction Unlikely for 2014, Experts Say

Although the White House is expected to call for a cap on the charitable tax deduction when it releases its budget next month, nonprofit experts are confident the deduction will be left intact by the current Congress, the Chronicle of Philanthropy reports.

Changes in tax policy have little chance of being passed unless they are part of a broader tax bill that attracts bipartisan support, budget experts told the Chronicle, and cobbling together such legislation in advance of the midterm elections in November will be difficult. Senate Finance Committee chair Max Baucus (D-MT) — who had been eager to overhaul the tax code before leaving the Senate to serve as ambassador to China — is likely to be succeeded by Sen. Ron Wyden (D-OR), a staunch supporter of the deduction.

Several tax breaks benefiting charities that expired at the end of 2013 also may not be revived until later in the year, including a measure that allows retirees to exclude from their taxable income IRA withdrawals of up to $100,000, provided the money goes to charity; a number of incentives designed to encourage restaurants to donate their excess food to charities; and various deductions for donations of property made to benefit land-conservation efforts.

Steve Taylor, senior vice president for public policy at United Way Worldwide, told the Chronicle that while Congress is likely to extend the provisions by attaching them to a "must-pass" bill at some point in the year, prompt legislative action on the measures is unlikely. And that’s too bad, said Taylor. "The donors that are incentivized to make the IRA rollover are trying to make some pretty complicated financial decisions. By that time, they’ve already withdrawn the money and done something else with it."

"Charitable Deduction Probably Safe for 2014, Say Experts." Chronicle of Philanthropy 01/16/2014.