Tax Cuts and Jobs Act

Article Dean Dorton

This is the first in a five-part series that highlights the segments of the newly enacted Tax Cuts and Jobs Act and how it impacts the real estate industry.

We will focus on the following topics:

  1. Cost recovery and expensing of depreciable assets
  2. 20% deduction for qualified business income
  3. Excess business losses and net operating losses
  4. Business interest expense limitations
  5. Like-kind exchanges, rehabilitation credit, and qualified opportunity zone gain deferral

In our first installment, we will discuss highlights of the Act and how it impacts capitalization and cost recovery of assets.

First, let’s discuss a section of the Act which may impact assets placed in service during the 2017 tax year.

Bonus depreciation

Prior to September 27, 2017, new assets with modified accelerated cost recovery system (MACRS) lives of 20 years or less were eligible for 50% expensing in their first year in service. For assets acquired and placed in service after September 27, 2017, bonus depreciation has been expanded to include used assets (as long as the use is original to the taxpayer) and increased to 100% expensing. This means certain assets can be fully expensed in their year of purchase. Please note that assets that had a written binding contract prior to September 27, 2017will not be eligible for 100% bonus depreciation. Assets purchased from a related party or controlled group, or received through gift or inheritance, are not eligible for bonus depreciation.

Bonus depreciation at 100% of cost will be available for assets placed in service from September 27, 2017 to January 1, 2023. Then it will be phased out over the period from January 1, 2023 to December 31, 2026 and will be fully eliminated after December 31, 2026. Taxpayers will still be able to elect out of bonus depreciation if they choose.

States will have to decide whether they will follow the changes to federal depreciation rules. If they do not follow the federal law, then there will be adjustments for state purposes to be considered in tax planning.

The next two changes only impact assets placed in service after December 31, 2017.

Section 179 expensing

The Section 179 election allows for 100% expensing for eligible assets up to certain annual limits. The limit for expensing annually increases to $1 million for eligible assets placed in service after December 31, 2017. Section 179 expensing is limited based on the amount of total assets placed in service. This “phasedown” has been increased to $2.5 million after December 31, 2017. This election is only allowable up to net taxable income.

Eligible Section 179 property is tangible personal property, computer software and a newly created “qualified real property”. The inclusion of qualified real property will greatly expand the ability to expense fixed asset additions. Qualified real property includes the newly created qualified improvement property (discussed below), as well as certain structural improvements to the nonresidential real property. This includes roofs, HVACs, fire protection and alarm systems, and security systems. Qualifying property has also been expanded to include certain depreciable personal property used to furnish lodging (e.g., beds, refrigerators, ranges, et cetera). There has been no change related to residential rental property’s ability to take Section 179 on tangible personal property.

Qualified improvement property

Previously, there were three types of qualified improvements to real property—qualified leasehold improvements, qualified restaurant improvements, and qualified retail improvements. All three definitions varied and had different implications for the ability to currently expense improvements. The new law provides for a single qualified improvement property. This property is any improvement to the interior portion of a building placed in service after the original building is placed in service, and is effective for assets placed in service after December 31, 2017. Qualified improvement property has a 15-year recovery period (20-year ADS period), which means it will be eligible for the 100% bonus depreciation from January 1, 2018 through December 31, 2022, as well as Section 179 expensing.

We have not discussed the interaction of the new cost recovery options with the tangible asset regulations that were issued in 2014 that provided guidelines on capitalization of assets versus expensing as repairs. These will need to be considered when making elections related to 100% bonus expensing versus Section 179 expensing. There will also be interaction with the 20% deduction for qualified business income and the limitation on interest expense, which we will discuss in further detail in our next installment.

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Article Dean Dorton

As we continue our analysis of the TCJA, this week’s newsletter will focus on some of the more important individual tax changes, specifically those pertaining to itemized deductions.

Every deduction indicated on Schedule A of your individual income tax return has been modified to some extent under the TCJA. Accordingly, if you’re a taxpayer that has historically itemized deductions, the changes discussed below will, to some degree, have an impact to your taxable income in the coming years.

Unless otherwise noted, these changes are in effect for tax years beginning after December 31, 2017 and before January 1, 2026.

Changes to deduction for medical and dental expenses

Under pre-TCJA tax law, the deduction for qualified medical expenses was allowed for qualified medical expenses exceeding 10% of adjusted gross income (“AGI”). This floor was reduced to 7.5% of AGI for taxpayers 65 and older, however that provision expired on December, 31, 2016.

Under TCJA tax law, for tax years beginning after December, 31, 2016 and before January 1, 2019, a taxpayer that itemizes may deduct qualified medical expenses, so long as they exceed 7.5% of AGI. As such, the new law extends the 7.5% through 2018 and retroactively makes it available to taxpayers that itemize, regardless of age, during this period.

Changes to state and local tax deduction

Under pre-TCJA tax law, taxpayers were entitled to a deduction equal to the state and local taxes (“SALT”) paid during the year. The deduction consisted of the following types of taxes paid:

  • State, local, and/or foreign real property taxes
  • State and local personal property taxes (i.e. cars, boats) and
  • State, local, and/or foreign income taxes

It is also worth noting that there were no caps or limitations on the amount of SALT deducted on Schedule A (unlike medical expenses).

Under the new tax law, no changes were made with regard to the types of taxes that a taxpayer may deduct, so long as they fall under one of the aforementioned tax types. However, the same cannot be said of the amount of deduction allowable on Schedule A. Unfortunately, the new tax law places a $10,000 ceiling on the SALT deduction. Since this has traditionally been one of the largest itemized deductions, it is anticipated that it will have one of the greatest impacts to taxable income.

Changes to mortgage interest deduction

Under the TCJA, mortgage interest on loans used to acquire a principal residence and/or a second home remains deductible, but only on debt up to $750,000. This represents an unfavorable increase of $250,000 since the limitation was $1 million under prior tax law. Taxpayers with existing acquisition debt, that is, debt acquired on or before December 15, 2017, would remain subject to the $1 million limitation, as the new law is not applied retroactively. Additionally, mortgage refinances after 2017 will be considered incurred on the date of the original mortgage so long as the refinanced debt does not exceed the original debt. This will afford taxpayers with existing debt the option to refinance without being encumbered by the new limitations.

Interest on home equity loans, regardless of when the debt was acquired, is no longer deductible under the TCJA. However, based on current guidance, it is not yet clear whether proceeds from home equity loans used for business purposes may be deductible elsewhere on a taxpayer’s return (i.e. Sch. E in the case of a rental or Sch. A in the case of investment interest). It is anticipated that the IRS will provide further clarification on this in future guidance.

Changes to charitable contributions deductions

Under the TCJA, the limit for cash contributions has been extended from 50% to 60% of the contribution base, which is generally a taxpayer’s adjusted gross income (AGI). However, payments made to a college or university in exchange for the right to purchase tickets to an athletic event are no longer deductible. This represents a divergence from pre-TCJA tax law, under which 80% of such payments were treated as deductible contributions.

Changes to miscellaneous itemized deductions

Under the new law, all miscellaneous itemized deductions that are subject to the 2% of AGI floor are no longer deductible. Such expenses include, but are not limited to, the following:

  • Unreimbursed employee expenses
  • Investment expenses (i.e. brokerage fees)
  • Tax preparation fees
  • Hobby expenses

Changes to personal casualty loss deduction

Under the TCJA, casualty and theft losses are generally only deductible to the extent they are attributable to a “federally declared disaster”. There is a limited exception for taxpayers who have personal casualty gains, whereby losses not attributable to a disaster may be used to offset such gains, but not below zero. For the purposes of this provision, a “federally declared disaster” is one that has been determined by the President to warrant federal assistance under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.

Additionally, the TCJA retroactively provides relief to taxpayers who incurred a disaster loss in tax years 2016 and 2017 by raising the $100-per-casualty limitation to $500 and waiving the 10% of AGI floor.

Changes to the deduction for gambling losses

Historically, gambling losses have only been deductible to the extent of gambling winnings. However, a 2011 tax court ruling in Mayo vs. Commissioner (136 TC 181) allowed taxpayers engaged in the trade or business of gambling to exclude certain non-wagering expenses (i.e. travel, meals, entry fees, etc.) from “gambling losses” and report them on Schedule C.

Given that this has long been a point of contention by the IRS, it should come as no surprise that the TCJA, for purposes of the limitation, broadens the definition of “losses from wagering transactions” to include any and all non-wagering expenses. As such, it is no longer possible to create a loss from gambling, regardless of whether it is considered a trade or business of the taxpayer.

Changes to the overall limitation on itemized deductions

Under pre-TCJA tax law, this provision, also known as the “Pease limitation”, was an overall limit on otherwise allowable itemized deductions of high income taxpayers. In an effort by congress to “simplify” the internal revenue code, this overall limitation has been completely repealed under the TCJA. It is unclear at this point whether taxpayers will really benefit from this change, since almost all itemized deductions have been limited or repealed individually (i.e. SALT, miscellaneous itemized deductions, et cetera).

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Article Dean Dorton

By: Mike Shepherd

Is the recent Tax Cuts and Jobs Act a simplification or complication?

The short answer is yes. But how can it be both simplification and complication you ask? Congress works in mysterious ways.

The flagship change of the Tax Cuts and Jobs Act (TCJA) is that it cuts corporate rates from 35 percent to 21 percent in order to bring the United States more in line with corporate rates in the rest of the world. This is supposed to stimulate the economy and increase job growth, which in turn is supposed to increase the individual income tax base to help pay for the corporate rate decrease. At the same time the TCJA is supposed to simplify the tax code for most Americans.Simplification

Depending on where you pull the statistics, approximately 40 percent of U.S. taxpayers will itemize when filing their 2017 income tax returns. The TCJA implements changes that should drop that number to approximately 10 percent.

So when you hear the politicians touting simplification, they are referring to this large drop in itemized filing. The TCJA accomplishes this with some of the following changes:

  • Increase the standard deduction from $6,500 to $12,000 for single filers and $13,000 to $24,000 for married filing jointly
  • Increase the child tax credit from $1,000 to $2,000 per qualifying child, and increase the phase-out of these credits from $75,000 for single filers and $110,000 for married filers to $200,000 for single filers and $400,000 for married filers
  • Personal exemptions are suspended
  • Home equity line interest deductions are suspended
  • Charitable contributions for amounts paid for college athletic seating rights are suspended
  • Miscellaneous itemized deductions are suspended
  • Alimony deductions are suspended
  • Itemized deduction limitation is suspended
  • Casualty and theft losses are suspended
  • Moving expense deductions are suspended

Complication

For those left in the 10 percent itemization bucket and those with small businesses (which is most likely a lot of the readership of this publication), things get more complex. The TCJA will be a tax cut for most; however, many taxpayers—particularly those with high wages—will end up with a tax increase. A few of the complex changes are as follows:

  • The state and local tax deduction (income and property) is capped at $10,000. This change is particularly tough on those in high income tax states. Many don’t think of Kentucky as a high income tax state, but when you add in the local tax, taxpayers in Kentucky’s two most populous counties of Jefferson and Fayette pay between 8 percent and 9 percent, which is not low in relation to many other states.
  • The top individual tax rate is reduced to 37 percent from 39.6 percent, but the cap on the state and local deduction may still cause tax increases for some highly compensated Kentuckians.
  • The complicated individual alternative minimum tax (AMT) is retained with higher exemption amounts.
  • A new limitation is placed on “excess business losses.” This complex calculation is likely to hurt some small business owners and those with equine businesses by limiting the amount of currently deductible losses from those businesses.
  • A new qualified business income (QBI) deduction is added which creates a potential 20 percent deduction for businesses that qualify. A recent Forbes article did a Q&A on how this deduction and the related limitations work. The printed article is 39 pages long.

Anytime the tax law is changed dramatically, there are “ripples” in the new law which cause unintended consequences. It’s likely to take years for a lot of those items to be completely sorted out which adds to the complication.

Many CPA firms will be running side-by-side 2018 versus 2017 comparisons with their 2017 tax preparation process to help taxpayers better understand the implications of the TCJA. Further, many taxpayers may want to make changes during 2018 to adjust to the new law.

Time will tell if the TCJA accomplishes its goals. However, one thing is for certain; the TCJA is the most sweeping tax legislation we’ve had in over 30 years.

As always, please consult with your tax adviser regarding the changes that might be applicable to your specific situation.

As originally featured in Louisville’s Business First

Article Dean Dorton

In our second installment on the new tax law, we will focus on depreciation-related provisions.

Many of you may have previously benefited from bonus depreciation and Section 179 expensing — tax incentives that have allowed businesses to accelerate deductions quicker than regular depreciation. The new law has increased, extended and modified these tax incentives.

Most of the changes are effective for years beginning after December 31, 2017, but there are some changes that are retroactive to September 27, 2017.

Changes to bonus depreciation

For qualified property acquired and placed in service after September 27, 2017, the new law increases the amount eligible to be immediately expensed to 100% of the purchase price. Additionally, the definition of qualified property is expanded to include used property. Note that used property is eligible for bonus depreciation only if it is the taxpayer’s first use of the property. Meaning, if a business purchases a used piece of equipment, and it is the first use of that piece of equipment for the acquiring business, then the property would qualify for bonus depreciation.

For most qualified property, bonus depreciation will begin phasing-down from 100% expensing starting on January 1, 2023. The phase-down schedule is as follows:

  • 100% for property placed in service after Sept. 27, 2017 and before Jan. 1, 2023
  • 80% for property placed in service during calendar year 2023
  • 60% for property placed in service during calendar year 2024
  • 40% for property placed in service during calendar year 2025
  • 20% for property placed in service during calendar year 2026

It is important to note qualified property that was acquired on or before September 27, 2017, but placed in service after this date will not qualify for 100% expensing under the new law. Property won’t be treated as acquired after September 27, 2017 if a written binding contract was entered into for its acquisition on or before this date. Instead, the pre-Tax Cuts and Jobs Act law on bonus depreciation will be applicable.

Both the old law and new law allow for businesses to elect out of bonus depreciation and depreciate qualified property under regular depreciation rules. For a taxpayer’s first taxable year ending after September 27, 2017, a taxpayer may also elect to use the 50% bonus depreciation rate instead of 100%.

Changes to Section 179 expensing

For taxable years beginning after December 31, 2017, Section 179 expensing is increased to $1,000,000 on up to $2,500,000 of qualifying purchases. Section 179 expensing begins phasing out dollar for dollar for each qualifying purchase over $2,500,000. Unlike bonus depreciation, Section 179 expensing is limited to net trade or business income which means it cannot create a tax loss.

Property eligible for Section 179 expensing includes tangible personal property, computer software and qualified real property. Under the new law, qualified real property has been expanded and includes:

  • Qualified improvement property (defined below)
  • Certain structural improvements made to nonresidential real property placed in service after the date such property was placed in service including:
    • Roofs
    • Heating, ventilation and air-conditioning property (HVACs)
    • Fire protection and alarm systems
    • Security systems

Changes to depreciation provisions for nonresidential real property

In an effort to simplify the tax code, the new tax law condenses the improvement categories (leasehold, retail, and restaurant) which were eligible for special depreciation deductions under the old law into one category called “qualified improvement property”. Qualified improvement property is defined as any improvement to an interior portion of a building which is nonresidential real property if such improvement is placed in service after the date such building was first placed in service. The definition excludes the enlargement of the building, any elevator or escalator, or the internal structural framework of the building.

Qualified improvement property qualifies for a 15 year recovery period using the straight-line method for regular depreciation and is eligible for both bonus depreciation and Section 179 expensing.

The changes noted above are effective for property placed in service after December 31, 2017.

Other changes

There are many more changes made to depreciation-related provisions under the new tax law that we will not detail in this article. Some of these changes include:

  • An increase in the annual caps on luxury automobiles depreciation
  • Specific changes to depreciation of farm property:
    • 200% declining balance method can be used for certain farm property, and
    • farm equipment is now eligible for a 5-year cost recovery period
  • Shorter ADS recovery period for residential rental property
  • Limitations on the use of bonus depreciation for certain businesses with floor plan indebtedness

All of these noted changes are effective after December 31, 2017.

Read Previous Article: Employee Benefits

Article Dean Dorton

What is Changing?

Over the coming weeks, we will be sending out more details relating to the new tax law. Given the volume of changes, we will be releasing a more detailed review of a few specific topics at a time.

There are a few employment-related changes in the new tax bill which could require companies to rework internal policies or accounting immediately in 2018.

NEW: Credit for employers providing paid family and medical leave

For tax years beginning after 12/31/17, an employer that offers at least two weeks of annual paid family and medical leave, as described by the Family and Medical Leave Act (FMLA), to all “qualifying” full-time employees (proportionate for non-full-time employees) will be entitled to a tax credit. The paid leave must provide for at least 50% of the wages normally paid to the employee. “Family and medical leave” does not include leave provided as vacation, personal leave, or other medical or sick leave.

A “qualifying employee” is an employee who has been employed by the employer for at least one year, and whose compensation for the preceding year did not exceed 60% of the compensation threshold for highly compensated employees (i.e., compensation did not exceed $72,000).

The credit will be equal to 12.5% of the amount of wages paid to a qualifying employee during such employee’s leave, increased by 0.25% for each percentage point the employee’s rate of pay on leave exceeds 50% of the wages normally paid to the employee (but not to exceed 25% of the wages paid).

Time to repay employer-sponsored retirement loans

Old Law: Retirement plan loans were generally immediately due and payable when the plan terminated or the participant terminated employment. If the loan was not repaid, the plan would offset the loan against the participant’s account. This loan offset may be rolled over by making an equivalent contribution to an IRA or another qualified plan, but this had to be done within 60 days of the date of the offset.

New Law: For tax years beginning after 12/31/17, the period to roll over a loan offset is extended to the individual’s due date for the tax return for the year in which the offset occurred (including extensions).

What does this mean? You should review your company retirement plan loan distribution paperwork and determine whether any prospective modifications need to be made.

Moving/relocation expenses

Old Law: An employer could exclude qualified moving expense reimbursements from an employee’s wages for both income and employment tax purposes. Likewise, employees could claim a deduction for qualified moving expenses.

New Law: For tax years beginning after 12/31/17, qualified moving expense reimbursements are no longer excluded from wages except for Armed Forces on active duty, and are no longer deductible by the employee.

What does this mean? You should review your company policies relating to moving/relocation expenses and adjust them accordingly. Any reimbursements of these expenses to employees or direct payments of moving expenses on behalf of employees (e.g. payments directly to a moving company) should be treated as taxable compensation to the employee going forward.

Employee achievement awards

Old Law: An employer could deduct up to $400 (or up to $1,600 in the case of certain written nondiscriminatory achievement plans) of the value of certain employee achievement awards for length of service or safety. The employee receiving such award can exclude the award from income to the extent that the value of the award does not exceed the employer’s deduction.

New Law: For expenses beginning 1/1/18, the employee’s exclusion and employer’s deduction for employee achievement awards will not apply to cash and so-called “cash equivalents” (gift coupons/certificates, vacations, meals, lodging, tickets to sporting or theater events, securities, and other similar items). However, an employee can still exclude (and an employer can still deduct) the value of other tangible property and gift certificates that allow the recipient to select tangible property from a limited range of items pre-selected by the employer. The prior law annual amounts still apply.

What does this mean? You should review your company policies relating to employee achievement awards. If your company chooses to continue providing cash or cash equivalents, these should be treated as taxable compensation to the employee going forward. Alternatively, you can adjust your company policy to provide only non-cash/cash equivalents achievement awards going forward.

Employer deduction for entertainment, amusement, and recreation provided to employees

Old Law: An employer could fully deduct expenses for recreational, social, or similar activities primarily for the benefit of non-highly compensated employees, provided such activities directly relate to the active conduct of the employer’s business.

New Law: For expenses beginning 1/1/18, this deduction is fully disallowed.

What does this mean? You should segregate these expenses in your accounting system so that they can be appropriately treated under the new law. You should consider your company policy related to these expenses and assess whether prospective changes need to be made.

Employer deduction for meals, food, and beverages provided to employees

Old Law: An employer could fully deduct any food and beverage expense that can be excluded from an employee’s income as a de minimis fringe benefit.

New Law: For expenses beginning 1/1/18, there will be a 50% limitation on the deduction for food and beverages that qualify as a de minimis fringe benefit, including expenses for the operation of an employee cafeteria located on or near the employer’s premises.

What does this mean? You should segregate these expenses in your accounting system so that they can be appropriately treated under the new law. You should consider your company policy related to these expenses and assess whether prospective changes need to be made.

Employer deduction for meals and entertainment provided to customers

Old Law: An employer could deduct 50% of the cost of meals and entertainment expenses paid on behalf of customers provided they were directly related to the active conduct of that trade or business.

New Law: For expenses beginning 1/1/18, all entertainment, amusement, recreation expense, membership dues for business, recreation and social clubs, and related facility expenses are 100% disallowed regardless of whether or not directly related to the active conduct of a trade or business. However, the 50% deduction for food and beverages associated with the active conduct of a trade or business is retained.

What does this mean? You should segregate these expenses in your accounting system so that they can be appropriately treated under the new law. You should consider your company policy related to these expenses and assess whether prospective changes need to be made.

Employer deduction for qualified transportation fringe benefits

Old Law: An employer could deduct the cost of certain transportation fringe benefit provided to employees (i.e., parking, transit passes, and vanpool benefits), even though such benefits are excluded from the employee’s income.

New Law: For expenses beginning 1/1/18, the employer deduction for qualified transportation fringe benefits is fully disallowed. In addition, except as necessary for ensuring the safety of an employee, the employer deduction for providing transportation or any payment or reimbursement for commuting to work is disallowed.

What does this mean? You should segregate these expenses in your accounting system so that they can be appropriately treated under the new law. You should consider your company policy related to these expenses and assess whether prospective changes need to be made.

Disclaimer

The information presented is not intended to be a full and exhaustive explanation of the tax bills referenced as there are many more provisions. Please consult with your tax advisor regarding the policies that might be applicable to your specific situation.

Article Dean Dorton

By Allison Carter, CPA

The current bill for the Tax Cuts and Jobs Act, which was signed by President Trump on Friday, has several provisions impacting tax-exempt organizations. Below is a brief overview of the highlights of those provisions.

Highlights of the Provisions

  • Require tax-exempt organizations to calculate unrelated business taxable income (UBTI) separately for each trade or business carried on — in effect prohibiting deductions relating to one business from offsetting income derived from another business. This provision is effective for tax years beginning after December 31, 2017. This could be a big deal for exempt organizations that have been using losses from one activity to offset income from another. Importantly, net operating losses from prior years will continue to be available to offset net income, regardless of the source of the loss.
  • Require tax-exempt organizations to increase UBTI by the amount of certain fringe benefits, such as qualified transportation and on-premise athletic facilities, provided to their employees, effective for amounts paid or incurred after December 31, 2017.
  • Repeal the exclusion from gross income for interest on a bond issued to advance refund another bond for bonds issued after December 31, 2017.
  • Repeal the authority to issue tax credit bonds and direct-pay bonds issued after December 31, 2017.
  • Private activity bonds, which were on the chopping block in the House version of the bill, remain intact, for now – there is continuing discussion in Congress on returning private activity bonds to the purposes for which they were originally intended.
  • Impose a 1.4% excise tax on net investment income on private colleges and universities (and their related organizations) that: (1) have at least 500 students; (2) have at least 50% of their students located within the United States; and (2) have assets (other than assets used directly in carrying out the institution’s educational purpose) with an aggregate fair market value of at least $500,000 per full-time student at the end of the preceding year. The assets and net investment income of related organizations would be included in determining the applicability and amount of the tax if the assets and income are available to the educational institution. The tax will be effective for tax years beginning after December 31, 2017. Harvard has estimated that, had this provision been in place last year, its tax bill would have been $43 million.
  • Impose an excise tax of 21% on compensation, plus any parachute payment in excess of $1,000,000, paid to any of a tax-exempt organization’s five highest compensated employees for the year and any employee who was one of the organization’s five highest paid employees in any tax year beginning after 2016. The tax would apply to W-2 wages, not including designated Roth contributions, but including amounts included under 457(f). In addition, payments to medical professionals for providing medical or veterinary services would be exempted from the definition of “compensation” for purposes of the tax. The tax would be effective for tax years beginning after 2017. This provision applies to both public and private organizations and includes compensation from any related or governmental entity. So, paying a senior executive or coach $6mm will cost the organization an additional $1,050,000.

While the itemized deduction for charitable donations was not repealed, the Act does disallow certain other itemized deductions and increase the standard deduction for individuals, thus removing the benefit of a charitable deduction for many. A 2017 study by the Indiana University Lilly Family School of Philanthropy suggests that charitable giving may drop by up to $13 billion annually. For fundraisers, we’re suggesting focusing more on the good you do and less on deductibility, at least for smaller donors.

Also keep in mind that while the increased standard deduction and lowering of itemized deductions is expected to result in only 5% of taxpayers itemizing deductions, before the change only about 30% itemized — so even before this change, 70% of taxpayers got no benefit from charitable contributions and yet, many contributed anyway.

Disclaimer

The information presented is not intended to be a full and exhaustive explanation of the tax bills referenced. Please consult your tax advisor regarding the policies that might be applicable to your specific situation.