New Federal Tax Code Means Angst For Colorado Nonprofits
On Wednesday, Republican leaders in Congress touted their new tax overhaul as a boon for working Americans. But it's causing stress for Colorado nonprofits.
The plan, once it's signed into law by President Trump, will nearly double the Federal standard deduction from $6,500 for individuals to $12,000, and to $24,000 for married couples filing jointly.
The effect may well be that far fewer people will itemize deductions, since the need to do so is eliminated with a larger standard deduction. And that means they may donate to nonprofits less than in previous years, the Colorado Nonprofit Association says.
According to 2016 tax records, Coloradans with an annual income less than $200,000 a year "previously deducted $1.7 billion in charitable gifts," according to the organization. And that means the new tax code could prompt a negative impact on charitable giving to the tune of $12 to $20 billion annually.
Here in Colorado, this could have a big impact for smaller nonprofits.
Lydia McCoy, Vice President of the Colorado Nonprofit Association, says it's no coincidence that there are mailers and calls going out from nonprofits this time of year.
"Nonprofits are saying 'this is a great time' to ask people to consider us when they're looking at charitable giving," she says.
The fear is not that people will stop giving to charitable organizations entirely, but that they'll give less. McCoy is hopeful, however, that with more money in Coloradan's pockets, they'll still make a point to give.
"We know that people's number one reason to give is because it's a cause they're passionate about. But, I do fear that we'll see a decrease in giving because people won't be doing the math necessarily around taxes and say I need to give 'this much' to get my full deduction," she says.
"Instead they'll give enough to make them feel good, but it may not be as much as they have in the past."
President Trump has indicated he’ll sign the new tax code into law by the end of the year.