A new report from Newsday Long Island suggests that the new Tax Cuts and Jobs Act could slash charitable contribution this year. How is that? What can you do about it?
Some analysts, nonprofit heads, and CPAs pose that the new tax bill could negatively affect the amount of donations charities. How likely is that? What is driving this concern? How can you continue to help the causes you care about?
The premise of the Newsday report is that Long Island charities heavily rely on donors who give each year to avoid income taxes and maximize tax breaks. Only this year, the new tax plan has doubled the standard deduction. Meaning fewer will need to give in order to maximize deductions. Newsday says only the top 5% of income earners will benefit from the tax deduction for charitable donations. One of the few breaks preserved by the new rules.
Some may see their net income drop due to the new tax system. Yet, the biggest concern is that motivation to give will be cramped by less need to give in order to maximize tax breaks.
Among those that want to give, one of the biggest factors hampering them is the on going high property taxes on Long Island, and continually bloated and incorrect property tax bills. That’s not a new issue.
NY Governor Cuomo has said the higher tax burden this year risks “driving people from the state and reducing our ability to attract business.” That’s certainly a possibility. Many may be better off moving their businesses and residences to lower cost parts of the country. Politicians are reportedly at work to reclassify types of taxes. Such as moving state income taxes to being payroll taxes, and property taxes to being ‘charitable contributions’.
It would be great if the NY state income tax and property tax system was revamped, streamlined, and made more efficient. That alone could create big savings. Enough to slash annual taxes on property owners, and funnel more money to social projects and those who need it. There is just little motivation to do so for those that really have the ability.
For now, the answer for individuals on Long Island remains almost exclusively to challenge annual property taxes and individual tax bills. This is a right every Long Islander should be exercising. Then you choose how to use it. Decide which cause you care about most, and check Charity Navigator for most efficient nonprofits solving those problems.