Introduction
The Tax Cuts and Jobs Act (TCJA) of 2017 brought significant changes to the US tax code, aiming to stimulate economic growth and investment. While permanent reductions in corporate taxes were implemented, many individual tax provisions, including deductions and credits, are set to expire by December 2025.
Potential reversion to pre-TCJA tax provisions could significantly alter the tax burden for various income groups, impacting donor behavior and trends in giving. On net, higher taxes means less disposable income, which is directly tied to charitable giving.
Some changes pose challenges and opportunities for philanthropy, such as lower limits for charitable deductions, lower deduction thresholds for charitable bequests, and changes to the standard deduction.
While tax policy is under discussion, lawmakers should look at ways to incentivize charitable giving, like allowing 401(k)/403(b) rollovers to donor-advised funds.
Risks to philanthropy are also on the table during these debates, including potential limits on charitable deductions or new taxes on nonprofit endowments and individual wealth. Policymakers must carefully balance fiscal objectives with the societal benefits of philanthropy to ensure continued support for charitable organizations and the communities they serve.
This paper outlines the expiring provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 and analyzes how the expiration or extension of various provisions may impact philanthropy in the United States. The importance of a tax code that is conducive to charitable activity and that strengthens the private voluntary sector is widely recognized by Philanthropy Roundtable. An increase in taxes is seen as counterproductive to this goal. While this debate continues, concern exists that recurring attacks on philanthropy, justified by associated revenue figures, may be proposed to “fund” other policy changes. The United States has a free enterprise market system at its core, but wealth creation is increasingly viewed negatively, and those with resources face increased scrutiny.
However, economic dynamism also fuels much of the generous giving that supports our communities, and the charitable causes Americans care about. The tax code should not be used to penalize economic success. Experts, economists, and policymakers are already engaged in discussions about what should happen in 2025.1 This paper is intended to inform that debate, not to advocate for or against specific provisions.
Tax Cuts and Jobs Act, Expiring Provisions, and Implications for Philanthropy
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