The vast majority of people who itemized deductions on their 2017 tax returns intend to increase or maintain their giving in 2018, a survey of Fidelity Charitable donors finds.
Based on a survey of three thousand Americans who made charitable donations in 2017 and who filed itemized returns, the study found that 82 percent of donors said their giving will not be affected by the increase in the standard deduction passed as part of the Tax Cuts and Jobs Act in December. The study also found that 58 percent of donors plan to file an itemized return in 2018, even though itemizing may not be the best choice in the new tax environment. According to Fidelity Charitable, the findings make it clear that many taxpayers have not worked through how tax reform is likely to affect them personally.
Tax experts have suggested that the increase in the standard deduction could lead to a 60 percent drop in the number of households filing itemized returns. A recent study conducted by the American Enterprise Institute, a conservative think tank, projected a drop in giving of between $16.3 billion (3.3 percent) and $17.2 billion (4 percent) as a result of tax reform.
The study of Fidelity Charitable donors also found that many households are unaware of strategies available to manage deductions, including a strategy known as "bunching" in which deductions over multiple years are taken in a single year so as to exceed the amount of the standard deduction. According to the study, only 30 percent of itemizers have heard of the strategy, meaning 70 percent of donors who have previously itemized tax deductions may be missing out on ways to maximize their tax savings.