What's Next: A Universal Charitable Deduction?

On February 28, 2023, Senators James Lankford (R-OK) and Chris Coons (D-DE) introduced The Charitable Act (“Act”). 

This Act was previously a part of The Pandemic Response and Recovery Act, which was introduced in March 2021. The legislation calls for a universal charitable deduction, which would be open to all taxpayers regardless of their level of income. Since its introduction, The Charitable Act has received a number of cosponsors, with the most recent added on March 27, 2023, by Senator Marsha Blackburn (R-TN).

In an attempt to sustain nonprofit organizations during the pandemic, the Coronavirus Aid, Relief, and Economic Security Act included a temporary charitable deduction up to $300 for individuals who do not claim itemized deductions on their Form 1040 for the year beginning 2020. This bill was further expanded to include the taxable year beginning 2021 and allow individuals to take up to $600 in deductions. There has been no expansion of this deduction to date, but there continues to be a push by lawmakers to reinstate the deduction.

In the meantime, the State of Massachusetts enacted the state law of a universal charitable deduction. After multiple delays, every Massachusetts resident may now claim deductions on their contributions in 2022 and 2023.  This is an especially great opportunity for both Massachusetts taxpayers and nonprofit organizations as inflation is on the rise and a recession is looming. 

Schneider Downs continues to monitor legislation and will provide updates as information changes.

About Schneider Downs Not-for-Profit Services 

Our Not-for-Profit industry group is committed to providing exceptional service and expertise to a community of clients who serve our regions tirelessly each day. We provide valuable insight to not-for-profit organizations of all sizes and their boards through our assurance, tax, advisory and technology consulting services and not-for-profit fund accounting software.  

To learn more, visit our Not-for-Profit Industry Group page.