Here is the really brief summary of some of the so-called Trump tax pre-proposal/rumors that might effect charitable and/or planned giving (he isn’t President yet so I wouldn’t call these a proposal yet):
- 3 income tax brackets: 12%, 25%, and 33% (obviously, those in the 39.6%/43.4% with Obama care tax will save a lot of money! – probably no significant impact)
- Goodbye estate tax (we have seen this before – since tax cuts generally must be revenue neutral, we might see the same old hocus pocus to make it “work” which usually means more business for estate planning attorneys;)
- Lower capital gains rates for those currently at 18.8%/23.8% rates with Obama care tax (not great for life income gifts like charitable remainder trusts)
- Cap the total amount of itemized deductions at $100,000 for single filers and $200,000 for joint filers (yikes: this could get interesting, probably a boom for Donor Advised Funds in the short term)
According to a CBS News article (click here to see), advisors might be rushing their clients into up-fronting charitable giving before year’s end to maximize deductions just in case some of Trump’s plans actually come to fruition reducing the charitable deductibility of major gifts in future tax years. The last bullet point is huge on this point – major campaign givers may want to consider the advice in the article!
After following tax law impacting charitable giving for close to 20 years, I am always hesitant to get ahead of ourselves – campaign discussions and even actual proposed presidential budgets rarely look like anything in legislation that is actually passed. So, let’s chalk up any hysteria that pushes donors into speeding up gifts (even to donor advised funds) as a good thing and wait to see what really transpires.