Congress Gives the Gift of Permanent Charitable Tax Incentives

Last week, Congress extended certain provisions related to charitable giving on a permanent basis, ending in part the piecemeal year-by-year extension process of years past. President Obama signed the bill late Friday.

The bill does the following:

  • Allows individuals who are 70½ and older to donate up to $100,000 to charity (though not to donor-advised funds) from their Individual Retirement accounts without treating the distribution as taxable income;
  • Expands the types of business entities that qualify for a tax deduction when they donate food to charity, and raises the cap on deductibility for those food donations;
  • Increases the AGI limit for donations of property for conservation purposes, extends the “carry forward” period in which deductions in the current tax year can be claimed; for qualified farmers and ranchers, the deduction limit is 100 percent of AGI.

However, the bill did not include a proposed provision to simplify the private foundation net investment income tax from the current two-tier system to a single 1 percent tax rate. In addition, the bill did not include donor-advised funds within the categories of charities into which qualifying individuals can make tax-free rollovers from their IRAs.

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