The American Taxpayer Relief Act of 2012
Its Impact on Charitable Giving
By Brian M. Sagrestano, JD, CFRE
On January 1, 2013, Congress passed the bi-partisan, 157-page American Taxpayer Relief Act of 2012.
This new law makes permanent several expiring tax provisions passed in 2001 and 2003 and includes a wide variety of other provisions, including "tax-extenders" (tax code rules that are usually re-authorized on a regular basis but not made permanent).
The Act does not renew a temporary payroll tax "holiday" for earners. This means that most working Americans saw a 2% decrease in take-home pay starting with their first paycheck in 2013.
The Affordable Care Act of 2010 also imposed new taxes to help offset the cost of legislation. Its significant provisions are also noted below.
Key Tax Code Changes
While the American Taxpayer Relief Act of 2012 did not dramatically alter charitable giving incentives for now, both political parties in Washington have suggested there is substantially more to do in order to decrease spending and increase tax revenues to help eliminate the budget deficit and eventually pay down our debt.
These additional discussions will likely occur as the Congress bumps up against deadlines for the continuing budget resolution (March), sequester (automatic spending cuts - March) and the debt ceiling.
You and your tax preparer should monitor these discussions and their impact on your charitable giving. Some of the proposed provisions could reduce the value of the income tax charitable deduction, but charities are working hard to ensure that this doesn't happen.
Of course, it is impossible to predict the future of tax policy. But it is also not wise to let the so-called "tail" of tax policy "wag" the charitable giving "dog." You give because you believe in our mission and we hope that you will continue to do so - regardless of tax law changes from Washington - so that we may continue our important work.