Wednesday, February 23, 2011

Charity Wednesdays - Possible Changes to Tax Breaks for Wealthiest Donors

I won't wax political about the hows and whys and whats of the federal budget, but those who regularly donate to charities should be interested in this article in the Chronicle of Philanthropy about reducing the value of itemized deductions for those in top tax brackets.

How much a proposal like this will affect the charitable sector depends on how much donors are motivated to give by tax incentives.  That answer may be different for those at varying income levels.  My family is solidly middle class.  While I keep good records of our donations to charity, come tax time my deductions for charitable donations don't significantly impact my return. Thus, I am motivated to give for reasons other than tax savings (the guilt induced by the look of sad droopy puppies on direct mail pieces, for example). Those who give more or who fall into higher tax brackets may be more impacted with the proposed changes than our family is.

Oh, and if you read this post and realized you need a refresher course in the difference between a tax deduction and a tax credit, click here.

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