Monterey, CA Charitable Giving Could Drop $9 Billion With New Tax Rules

View From A Non-Profit Serving Carmel, Carmel Valley, Gonzalez, Greenfield, King City, Marina, Monterey, Pacific Grove, Pebble Beach, Salinas, Seaside And Soledad California

Many non-profit organizations are up in arms about a proposal expected to be unveiled next week which would limit the value of tax deductions to 28%.  Couples earning $250,000 per year, for instance, who now deduct 100,000 in mortgage, state and local taxes and charitable giving and get a $39,600 savings on these deductions.  If the new rules are adopted, this tax savings would drop to $28,000, which could cause the wealthy to cut back on charitable giving.  Worse yet, the program is being expanded so that all deductions count against the 28% cap.  So, for instance, if a couple making $250,000 per year each contribute $17,500 to their 401K (the maximum for 2013), this would be $35,000 less that they could give to charity, in some instances.  It's estimated that charitable giving could decline more than $9 billion per year if the new rules are implemented.  It could also cause sales of high-end homes to decline, since some people won't be able to deduct all of their interest expense on their primary home.   

Please note that this blog reflects my personal opinion and may or may not reflect the opinion of Hands To Help Seniors and the individual members comprising the Board of Governors.