A bill introduced in the U.S. House of Representatives on July 25 would enable employees to set aside money for charity and receive a tax break.
It would incentivize employees to set up a flexible giving account through their employer. This would enable them to set aside a pretax portion of their paycheck to donate to a nonprofit of their choice, resulting in an immediate reduction in their taxable income.
Employees’ annual pretax contributions would top out at $2,700; gifts beyond that amount would be included in taxable income. There would be no minimum contribution.
The proposed legislation comes at a time when overall giving in the U.S. has plateaued. Last year, Americans’ donations to charity were virtually flat.
This owed in part to the tax overhaul, which doubled the standard deduction, resulting in a drop in the number of households that itemized deductions, from more than 45 million in 2016 to between 16 million and 20 million in 2018.