On November 16, the US House of Representatives voted to pass the Tax Cuts & Jobs Act, a sweeping tax reform bill that has deeply troubling ramifications for the nonprofit sector.
One provision of the bill doubles the standard deduction threshold, dramatically decreasing the number of taxpayers who benefit from charitable giving incentives by over 30 million. Nonpartisan analysts have projected that this could result in a devastating reduction in charitable giving across all sectors – $13.1 billion in 2018 alone. Moreover, a repeal of the estate tax could potentially reduce overall charitable giving by up to 12% per year, and bequests by as much as 28%.
A number of the provisions will disproportionately affect higher education. The plan would repeal a tax code that currently treats tuition waivers received for teaching or research as non-taxable income, effectively imposing a new tax on the majority of graduate students, and low- and middle-income students would no longer be able to deduct up to $2,500 per year in student loan interest. The bill also applies a 1.4% excise tax to private college endowments valued at $250,000 per full-time student, a provision that would affect nearly 100 institutions.
At GG+A, we believe it is our responsibility to help our clients prepare for the impact such a vast reduction in resources would have on their ability to advance their missions. We have created the GG+A Tax Reform Central that provides a centralized location to easily access a range of governmental information, news, commentary, and other resources related to the bill and its potential consequences. This includes content from:
- CASE Advocacy Action Center
- ACE’s Tax Reform and Higher Education
- Chronicle of Philanthropy
- Nonprofit Quarterly
- Insider Higher Ed
We will be continuously updating our page with new materials as we learn more about how the bill will affect philanthropy, now and in the years to come.