Tax Reform is here, so what's next for nonprofits?

The newly passed Tax Reform (The Tax Cuts and Jobs Act) that was signed into effect in December of 2017 brings many changes to a variety of industries including nonprofits. It's more important than ever for nonprofit organizations to understand the coming changes and how to implement them. Now is a good time to speak with your accountant so they can help you decipher, in a timely manner, what all of these new changes could mean for your organization.

We've highlighted two of the many changes with the new law below:

Estate Tax Exemption Increase

  • The gift and estate tax exemptions double from $5 million to $10 million (adjusted for inflation) per individual beginning in 2017. This provision will sunset in 2026, returning the exemptions to their current level.
  • An increase in the estate tax exemptions could significantly reduce the incentive for people (especially wealthy individuals) to make charitable contributions, as more property can now be transferred to beneficiaries tax-free. 

Charitable Contribution Deduction Limit Increase

  • The charitable contribution deduction limit increases for an individual to 60% of his or her adjusted gross income (AGI), up from the current limit of 50%.
  • At first glance, an increase in deduction limits appears to be an incentive for high-income donors to give more to charity, as they can claim more of their donations as a charitable deduction. However, this is unlikely in reality—especially when considering that the population of tax payers who actually do give up to 50% of their AGI currently is quite small. There may not be many more individuals who would give up to 60% of their AGI.

You may download the full list of changes by clicking the button below.

 DOWNLOAD NOW Tax Reform changes for Nonprofits 


Tagged Tax Reform, Nonprofit, Tax