Will America give more?

Extender tax deduction bill makes it through the House

Will America give more?

On February 11 of this year, the House passed the America Gives More Act. This bill is designed to permanently extend charitable deductions that taxpayers have enjoyed over the past few years, but it has a long way to go before becoming law.

One of the tax deductions is for gifts of food to food banks, which would increase the deductible limit from 10% to 15% of the taxpayer’s aggregate income. The deduction also allows for a five-year carryover for excess contributions and includes provisions to determine the fair market value of contributions.

The bill also would secure the tax deduction for charitable contributions of land designated for conservation purposes and the provision that allows qualified charitable distributions (QCD) to be issued directly from an IRA. However, the bill does not include a modification that would allow qualified IRA distributions to a donor advised fund.

Another provision of the bill reduces the excise tax rate on the net investment income of tax-exempt private foundations from 2% to 1%. This would greatly simplify the current tax scenario in which gains are taxed based on how much money is granted.

Alas, even if the bill succeeds in a Senate vote, the president has warned that he would veto the legislation because it does not contain spending cuts or tax increases to offset the loss of revenue. While more than two-thirds of the House voted for the bill, which would be enough votes to override a presidential veto, it is less likely that Democrats in the House would vote to override a presidential veto for political reasons. As of this writing, there are no final decisions, but we will keep you abreast of the status of this legislation.

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