On Dec. 20, 2017, Congress enacted the Tax Cuts and Jobs Act (the “Act”).

Implications for Charities:
  1. Unrelated Business Income Tax Rules: Rather than having the flexibility to aggregate all sources of unrelated business income, an operating charity must calculate the amount of unrelated business income it generates separately for each trade or line of business.
  2. Excise Taxes for Highly Compensated Nonprofit Employees: The Act imposes a new 21 percent excise tax on compensation in excess of $1 million paid by tax-exempt organizations to their covered employees.
  3. Excise Taxes for Large University Endowments: Private nonprofit colleges and universities that have at least 500 full-time or full-time equivalent students and endowment assets exceeding $500,000 per student are now subject to a new 1.4 percent excise tax on the net investment income.
Implications for Donors:
  1. Standard Deduction: The Act nearly doubles the standard deduction so individuals are more likely to opt for the standard deduction than to itemize deductions.
  2. Estate Tax Threshold: The Act substantially increases the threshold to qualify for the estate tax. One potential result of this change is a decline in the number of bequests to charitable organizations.
  3. AGI Limits for Cash Contributions: The Act increases the adjusted gross income limitation for individual donors’ cash contributions from 50 percent to 60 percent.
  4. “Pease Rule”: The “Pease rule” limiting all itemized deductions by certain high-income earners is repealed.

Read the full article on the Tax Cuts and Jobs Act of 2017 by Dianne Chipps Bailey at HuffingtonPost