H.R.801 - Charitable Act (119th Congress)
Summary
H.R. 801, the "Charitable Act," proposes to amend the Internal Revenue Code of 1986 to modify and extend the deduction for charitable contributions for individuals who do not itemize deductions. The bill focuses on tax years 2026 and 2027, allowing non-itemizers to deduct charitable contributions up to one-third of their standard deduction. It also eliminates certain penalties related to these deductions.
This legislation aims to incentivize charitable giving by providing a tax benefit to individuals who typically do not itemize, thereby broadening the scope of deductible charitable contributions. The bill also simplifies the tax code by removing outdated penalty provisions.
The bill was introduced in the House of Representatives on January 28, 2025, and referred to the Committee on Ways and Means.
Expected Effects
The primary effect of this bill would be to increase charitable giving among individuals who do not itemize their deductions. By allowing a deduction for charitable contributions, more people may be inclined to donate to charitable organizations.
Another effect is the simplification of the tax code by eliminating specific penalties related to charitable deductions. This could reduce confusion and compliance costs for taxpayers.
Finally, the change is temporary, applying only to the 2026 and 2027 tax years, which means its long-term impact is limited unless the provision is extended.
Potential Benefits
- Increased Charitable Giving: Encourages more individuals to donate to charities by providing a tax deduction.
- Simplified Tax Filing: Reduces complexity for non-itemizers by allowing a straightforward deduction.
- Support for Charitable Organizations: Provides additional funding to charitable organizations through increased donations.
- Fairness: Extends tax benefits related to charitable giving to a broader range of taxpayers, including those who do not itemize.
- Economic Stimulus: Increased charitable giving can stimulate economic activity within the non-profit sector.
Potential Disadvantages
- Limited Scope: The deduction is temporary, applying only to the 2026 and 2027 tax years.
- Complexity: While simplifying some aspects, the specific calculation (1/3 of the standard deduction) may still cause confusion for some taxpayers.
- Potential for Abuse: Increased deductions could create opportunities for fraudulent charitable contribution claims.
- Revenue Loss: The government may experience a slight decrease in tax revenue due to increased deductions.
- Disproportionate Benefit: Higher-income non-itemizers may benefit more due to the deduction being tied to the standard deduction amount.
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution, as it aims to promote charitable activities that benefit society. Specifically, the Preamble mentions promoting the "general Welfare." Additionally, Article I, Section 8 grants Congress the power to lay and collect taxes, duties, imposts, and excises to pay the debts and provide for the common defense and general welfare of the United States.
However, the Constitution does not explicitly address charitable deductions. The power to implement such deductions falls under the implied powers of Congress to enact laws related to taxation and spending.
There are no apparent constitutional conflicts arising from this bill.
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).