January 1, 2019

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Changes to Charitable Donation Tax Rules

February 6, 2018


Changes to Charitable Donation Tax Deductions, Exemptions, and Exclusions


The Tax Cuts and Jobs Act of 2017 retained seven tax brackets, but reduced tax rates per bracket, including a top marginal rate of 37%, down from 39.6%. Going forward, individual income tax brackets will be indexed for inflation, so brackets are expected to rise slightly less quickly than they would have using the prior indexing formula.


The income tax charitable deduction


While the income tax charitable deduction is retained in the Tax Reform Act, other itemized deductions are eliminated or subject to new limitations. State and local taxes will be deductible only up to a combined annual limit of $10,000. Deductions for mortgage interest will be limited to interest on up to $750,000 of debt for those married filing jointly, down from $1 million.  Note that in addition to the benefits above, the new law:

  • Increases adjusted gross income (AGI) limitation on charitable gifts of cash to public charities from 50% of AGI to 60% of AGI.  

  • The AGI limitation on charitable gifts of appreciated property to public charities remains 30% of AGI.  However, gifts of appreciated property remain a very efficient way to support charity and avoid capital gains taxes.

  • Itemizers will continue to be able to carry forward deductions subject to either limitation for up to five years.

Increase in the standard deduction


The law eliminates the personal exemption and increases the standard deduction to $12,000 for singles, $24,000 for married couples filing jointly, and $18,000 for heads of households.


Doubling of the Estate, Gift, and GST Exemptions


Effective January 1, 2018, the exemption against estate tax and gift tax is doubled from its current level of $5.6 million to $11.2 million.  This means that married couples, with effective planning, can transfer at least $22.4 million without estate and gift tax.  On January 1, 2018, the generation-skipping transfer tax ("GST") exemption also increases to $11.2 million ($22.4 million per couple).  However, more than taxes, proper planning can help you achieve the legacy you desire for your heirs.


Annual Gift Tax Exclusion Increased to $15,000


Effective January 1, 2018, a person shall be able to give $15,000 per year to any person without reducing their lifetime gift tax exemption.


Important Disclosures


Atomi Financial Group, Inc. is not, by means of this publication, rendering legal, tax, accounting, consulting, securities, real estate or other professional advice or services, and this publication should not be used as a basis for any investment decision or as a substitute for consultation with professional advisers. Atomi Financial Group, Inc. shall not be held responsible for any loss sustained by any person that relies on information contained in this publication.

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Atomi Financial Group, Inc. is a California Registered Investment Adviser. Call us toll free at 888-533-9364.

Office location: 20 Executive Park, Suite 120, Irvine, CA 92614. Mailing address: P.O. Box 11687, Newport Beach, CA 92658.

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