Bill Summary
The "Charitable Act" aims to amend the Internal Revenue Code of 1986 by modifying and extending the deduction for charitable contributions for individuals who do not itemize their deductions. Specifically, for taxable years 2026 and 2027, individuals who opt not to itemize will be able to claim a deduction for charitable contributions amounting to one-third of the standard deduction for that year. Additionally, the bill eliminates certain penalties associated with underreporting income related to charitable contributions. The changes are set to take effect for taxable years beginning after December 31, 2025. This legislation seeks to encourage charitable giving by allowing non-itemizers to benefit from tax deductions.
Possible Impacts
The proposed legislation, titled the "Charitable Act," modifies the tax code to allow individuals who do not itemize deductions to still benefit from a deduction for charitable contributions. Here are three examples of how this legislation could affect people:
1. **Increased Incentive for Charitable Giving**: Individuals who take the standard deduction instead of itemizing will be able to deduct a portion of their charitable contributions (up to one-third of the standard deduction amount) from their taxable income. This can encourage more people to donate to charities, as they can receive some tax benefits without having to itemize their deductions. For example, a person who regularly donates to a local food bank might feel encouraged to increase their contributions, knowing they can still receive a tax deduction.
2. **Financial Relief for Lower-Income Taxpayers**: Many lower-income taxpayers typically do not itemize their deductions because their total eligible deductions fall below the standard deduction threshold. By allowing these taxpayers to claim a deduction for charitable contributions, they may experience a lower tax burden and have more disposable income. This change could particularly help individuals and families who are struggling financially and want to support local charities or non-profits.
3. **Simplification of Tax Filing**: The modification may simplify the tax filing process for individuals who do not itemize. Since they can now claim charitable contributions directly on their tax returns, it eliminates the additional complexity and paperwork associated with itemizing deductions. This could lead to a more straightforward and user-friendly experience for taxpayers, particularly for those who are less familiar with tax regulations or who may find the itemization process daunting.
Overall, the legislation aims to make charitable giving more accessible and beneficial for a broader range of taxpayers.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 317 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 317
To amend the Internal Revenue Code of 1986 to modify and extend the
deduction for charitable contributions for individuals not itemizing
deductions.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 29, 2025
Mr. Lankford (for himself, Mr. Coons, Ms. Cortez Masto, Mr.
Hickenlooper, Mr. Ricketts, Ms. Klobuchar, Mr. Warnock, Mrs. Shaheen,
Mr. Curtis, Mrs. Blackburn, Mr. Moran, Mrs. Britt, Mr. Scott of South
Carolina, and Ms. Rosen) introduced the following bill; which was read
twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to modify and extend the
deduction for charitable contributions for individuals not itemizing
deductions.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Charitable Act''.
SEC. 2. MODIFICATION AND EXTENSION OF DEDUCTION FOR CHARITABLE
CONTRIBUTIONS FOR INDIVIDUALS NOT ITEMIZING DEDUCTIONS.
(a) In General.--Subsection (p) of section 170 of the Internal
Revenue Code of 1986 is amended to read as follows:
``(p) Special Rule for Taxpayers Who Do Not Elect To Itemize
Deductions.--In the case of a taxable year beginning in 2026 or 2027,
the deduction under this subsection for the taxable year shall be equal
to so much of the deduction determined under this section (without
regard to this subsection) for such taxable year as does not exceed an
amount equal to \1/3\ of the amount of the standard deduction with
respect to such individual for such taxable year. This subsection shall
apply only in the case of an individual who does not elect to itemize
deductions for the taxable year.''.
(b) Elimination of Penalty.--
(1) In general.--Section 6662(b) of the Internal Revenue
Code of 1986 is amended by striking paragraph (9) and by
redesignating paragraph (10) as paragraph (9).
(2) Increased penalty.--Section 6662 of such Code is
amended by striking subsection (l).
(3) Conforming amendments.--
(A) Sections 6662(h)(2)(D) of such Code is amended
by striking ``subsection (b)(10)'' and inserting
``subsection (b)(9)''.
(B) Section 6664(c)(2) of such Code is amended by
striking ``section 6662(b)(10)'' and inserting
``section 6662(b)(9)''.
(C) Section 6751(b)(2)(A) of such Code is amended
by striking ``by reason of paragraph (9) or (10) of
subsection (b) thereof'' and inserting ``by reason of
subsection (b)(9) thereof''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.
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