Overview
Title
To amend the Internal Revenue Code of 1986 to modify and extend the deduction for charitable contributions for individuals not itemizing deductions.
ELI5 AI
In H.R. 801, sometimes called the "Charitable Act," the government wants to let people who don't do lots of complicated tax counting still get a nice tax break when they give money to help others, starting in 2026.
Summary AI
H.R. 801, titled the "Charitable Act," proposes changes to the Internal Revenue Code of 1986 to allow individuals who do not itemize their deductions to still benefit from charitable contribution deductions. For tax years 2026 and 2027, this bill would permit such taxpayers to claim a deduction up to one-third of the standard deduction amount. It also aims to eliminate and adjust certain penalties related to these tax code changes. The amendments would take effect for taxable years beginning after December 31, 2025.
Published
Keywords AI
Sources
Bill Statistics
Size
Language
Complexity
AnalysisAI
General Summary
H.R. 801, introduced in the United States House of Representatives on January 28, 2025, seeks to amend the Internal Revenue Code regarding charitable contributions. Specifically, it proposes to modify and extend the deduction allowed for charitable donations by individuals who do not itemize their deductions on their tax returns. This bill aims to allow these taxpayers to claim a deduction equivalent to one-third of their standard deduction for the tax years 2026 and 2027. It also proposes changes to certain penalties related to tax inaccuracies, removing or altering them for improved clarity.
Summary of Significant Issues
One of the key issues highlighted by this bill is the complexity of its language, particularly in Section 2(a). Terms like "so much of the deduction determined under this section (without regard to this subsection)" are dense and may confuse ordinary taxpayers. Simpler language could greatly aid in public understanding. Additionally, the bill lacks an analysis of the fiscal impact these changes might have on government revenue, leaving questions about potential reductions in tax revenue unanswered.
Another significant issue is the opacity surrounding penalty modifications in tax inaccuracies. While the intention might be to promote fairness or clarity, without transparent explanation, these changes might be misunderstood, confusing taxpayers about their obligations and potential consequences.
Impact on the Public
For the general public, this amendment offers potential tax benefits to those who typically take the standard deduction, encouraging charitable donations by extending a deduction previously reserved for itemizers. This could increase charitable contributions by making them financially more attractive for a broader range of taxpayers. However, the complex language might deter some individuals from claiming the benefits if they find the process difficult to understand.
Impact on Specific Stakeholders
Nonprofit Organizations: If enacted, this bill could positively impact nonprofits by incentivizing charitable contributions from a larger pool of taxpayers. By making the financial benefits of donating more accessible, charities might see an increase in donations.
Taxpayers Not Itemizing Deductions: For non-itemizers, this bill offers a potential new tax break, which could enhance their engagement in charitable activities. This group would benefit financially from donating, although the complexity of the bill might obscure this benefit.
Government Revenue: The government might experience a reduction in revenue due to broader deductions. This could be significant depending on how many taxpayers take advantage of the new deduction.
Tax Professionals: Tax professionals may see an uptick in demand for services as individuals seek to understand and leverage the new rules, especially given the bill's complex language and indirect references throughout the Internal Revenue Code.
In summary, while H.R. 801 has the potential to encourage charitable giving by offering deductions beyond those who itemize, the bill’s complexities could impede its effectiveness unless clarified. Its broad implications for various stakeholders reveal a need for a balanced assessment, considering both fiscal responsibilities and public needs.
Issues
The complex legal language in Section 2(a) may make it difficult for taxpayers to understand the specifics of the deduction modification, particularly the phrase 'so much of the deduction determined under this section (without regard to this subsection).' Simplification or clarification is needed for better public comprehension.
There is no information provided on the fiscal impact of the changes in Section 2, which makes it difficult to assess whether these modifications will lead to revenue loss or other financial implications for the government.
The lack of detail and context in Section 1 makes it challenging for readers to understand the scope or objectives of the 'Charitable Act', which could lead to public misunderstanding of the bill's purpose and effect.
Section 2 includes amendments related to penalties under the Internal Revenue Code, but the dense legal language could obfuscate the practical implications for taxpayers, necessitating clearer explanation.
The bill includes multiple cross-references to other sections of the Internal Revenue Code, as seen in Section 2(b), which could complicate the public’s ability to understand the full impact of the changes without additional context.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the Act states that it can be officially referred to as the "Charitable Act."
2. Modification and extension of deduction for charitable contributions for individuals not itemizing deductions Read Opens in new tab
Summary AI
The bill modifies the tax code to allow individuals who do not itemize deductions to claim a charitable contribution deduction equal to up to one-third of their standard deduction for the years 2026 and 2027. It also removes certain penalties related to tax inaccuracies and updates related references, with these changes taking effect for tax years starting after December 31, 2025.