Americans are about to embark on the country’s largest tax reform in more than 30 years. In the midst of learning about the new tax law for 2018, there seems to be a general lack of clarity regarding how this will affect individuals, businesses, and charitable organizations. We hope the following points help clarify some of the misconceptions we’re seeing regarding the new tax law.
Some of the most significant changes are:
- Lower tax rates on taxable income;
- 10% up to $9,525 for an individual, and up to $19,050 for married filing jointly
- 12% from $9,525 to $38,700 for an individual, and $19,050 to $77,400 for married filing jointly
- 22% from $38,700 to $82,500 for an individual, and $77,400 to $165,000 for married filing jointly
- 24% from $82,500 to $157,500 for an individual, and $165,000 to $315,000 for married filing jointly
- Three more rates up to a maximum rate of 37% for income of more than $500,000 for those filing as an individual, and $600,000 for married filing jointly
- An increase in the standard deduction from $6,350 to $12,000 when filing as an individual, and from $12,700 to $24,000 for married filing jointly;
- Elimination of the $4,050 personal exemption;
- Expanded Child Care Credit (a dollar-for-dollar refund of taxes) from $1,000 to $2,000 per child;
- Limiting of state and local tax deduction to $10,000;
- Limiting of interest on mortgage deduction for a new home to a maximum of $750,000 mortgage;
- Significantly lowering small-business taxes;
- Significantly lowering corporate taxes; and
- Changing the way multinational corporations are taxed to be more consistent with the way most countries tax these entities.
While the opportunity to take a deduction for charitable donations still exists under the new tax law, the standard deduction threshold for itemizing your deductions, including charitable donations, has been raised. Therefore, while you may have itemized your deductions in the past, you might not meet the threshold for itemizing going forward.
The bottom line, we feel, is this. The great majority of our donors will actually have more discretionary income as a result of the new tax law, and we feel that what benefits our donors benefits ChildVoice. We also feel that most ChildVoice donors give to our work because they believe strongly in what we are doing to relieve suffering and trauma among war-affected adolescent girls—and not simply for a tax deduction.
Because of these points, we encourage you to continue your generous giving as we strive to bring the ChildVoice model to even more war-torn regions of the world. We also recommend that you meet with your tax advisor to discuss any concerns you might have regarding the new 2018 tax law.