S.317 - Charitable Act (119th Congress)
Summary
S.317, the Charitable Act, aims to modify and extend the deduction for charitable contributions for individuals who do not itemize deductions. Specifically, it amends Section 170 of the Internal Revenue Code of 1986 to allow a deduction for charitable contributions for non-itemizers in the 2026 and 2027 tax years. The deduction is capped at one-third of the standard deduction for the individual.
The bill also eliminates a penalty related to the deduction and makes conforming amendments to other sections of the Internal Revenue Code. These changes are set to take effect for taxable years beginning after December 31, 2025.
The bill is sponsored by a bipartisan group of senators, indicating potential broad support.
Expected Effects
The Charitable Act will likely increase charitable giving among individuals who do not itemize their deductions. By providing a tax incentive, more people may be encouraged to donate to charitable organizations.
The elimination of certain penalties related to charitable deductions could simplify tax compliance. This could reduce the risk of unintentional errors and associated penalties for taxpayers.
Overall, the Act aims to incentivize charitable giving and streamline the tax process for non-itemizers.
Potential Benefits
- Increased Charitable Giving: The deduction incentivizes more people to donate to charities, boosting funding for important causes.
- Simplified Tax Compliance: Eliminating penalties reduces the burden on taxpayers and minimizes errors.
- Support for Non-Profits: Increased donations can help non-profit organizations better fulfill their missions.
- Bipartisan Support: The bill's bipartisan nature suggests a higher likelihood of passage and implementation.
- Targeted Relief: The deduction specifically benefits non-itemizers, potentially providing relief to lower and middle-income individuals.
Potential Disadvantages
- Limited Duration: The deduction is only available for the 2026 and 2027 tax years, creating uncertainty for long-term planning.
- Cap on Deduction: The deduction is capped at one-third of the standard deduction, limiting the potential tax benefit for some individuals.
- Complexity: While aiming to simplify, the amendments to the tax code could still create confusion for some taxpayers.
- Potential for Abuse: Any tax deduction creates the potential for fraudulent claims, requiring oversight and enforcement.
- Revenue Impact: The deduction could reduce government tax revenue, potentially impacting other programs or increasing the deficit.
Constitutional Alignment
The Charitable Act appears to align with the general welfare clause of the Constitution, as it aims to promote charitable giving, which benefits society. The power to tax and spend for the general welfare is granted to Congress under Article I, Section 8.
There are no apparent infringements on individual rights or liberties. The bill does not establish a religion, abridge freedom of speech, or violate any other constitutional protections.
Overall, the bill seems to operate within the constitutional framework.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).