Deductions for charitable giving claimed by more than thirty-seven million U.S. taxpayers in 2016 totaled some $236 billion, or an average of $6,349, an analysis by the Washington, D.C.-based Tax Foundation finds.
Based on Internal Revenue Service data, the organization also reported that the average charitable deduction in four states — Wyoming ($12,991), Arkansas ($10,935), Utah ($10,165), and South Dakota ($10,019) — exceeded $10,000, while the state with the lowest average deduction was Rhode Island, at $3,354, followed by Maine ($3,642), Hawai'i ($4,111), and New Jersey ($4,325).
The organization estimates that as a result of the Tax Cuts and Jobs Act passed in December 2017, which among other things doubled the value of the standard deduction, nearly thirty million households will be better off taking the standard deduction instead of itemizing their deductions. Lower marginal tax rates under the new law also mean that for those still taking itemized deductions, their charitable giving will be subsidized to a lesser extent.
"What this means for charitable giving overall, however, is less certain," writes Erica York, an analyst with the Center for Federal Tax Policy within the foundation. "Though some households may decrease their giving, others may use new strategies, such as bunching their donations, or maintaining their giving by making multiple years’ worth of donations at once to have enough to itemize. Given that the tax subsidy for charitable donations has decreased, it would not be surprising if tax-motivated charitable giving decreases as well. However, households make giving decisions for a variety of reasons, many of which are not tax related."