In This Issue:

- Major Tax Provisions Relating to Charitable Organizations

- Other Law Changes Affecting Charitable Contributions

- Excerpt from Major Tax Provisions Relating to Charitable Organizations:

The personal exemption phase-out and the limitation on itemized deductions (including charitable deductions) have been reinstated for individual taxpayers with adjusted gross income (“AGI”) of greater than $250,000 and married filing jointly taxpayers with an AGI greater than $300,000. This so-called “Pease limitation” on itemized deductions reduces the total amount of a high-income taxpayer’s otherwise allowable itemized deductions by three percent of the amount by which the taxpayer’s AGI exceeds an applicable threshold. These total itemized deductions cannot be reduced by more than 80 percent. The Pease limitation is applied in addition to the charitable contribution percentage limitation, which generally limits the deductibility of cash contributions to 50 percent of AGI. Effectively, anyone above the Pease limitation threshold has an actual marginal tax rate that is three percent higher than the “official” marginal tax rate (until the full 80 percent of their itemized deductions has been disallowed).