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
S. 317 is a plan to let people who don't normally write down all their giving to charity still get some money back when they do it. For a couple of years, they can save money on their taxes by showing that they gave to good causes, up to a certain limit.
Summary AI
S. 317 seeks to amend the Internal Revenue Code of 1986 to change and extend the rules for tax deductions on charitable contributions. Specifically, it allows individuals who choose not to itemize deductions to claim a deduction for charitable contributions equal to up to one-third of their standard deduction for the years 2026 or 2027. The bill also removes certain penalties related to these deductions. These changes are set to apply to taxable years starting after December 31, 2025.
Published
Keywords AI
Sources
Bill Statistics
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Complexity
AnalysisAI
General Summary of the Bill
The bill, S. 317, titled the "Charitable Act," seeks to amend the Internal Revenue Code of 1986. It aims to modify and extend the tax deduction for charitable contributions for individuals who choose not to itemize their deductions. Specifically, for taxable years 2026 and 2027, these individuals can claim a charitable contribution deduction equivalent to up to one-third of their standard deduction. The bill also proposes eliminating certain penalties related to tax inaccuracies and clarifies related references. These amendments are set to take effect for tax years beginning after December 31, 2025.
Summary of Significant Issues
One major issue involves the complexity of the bill's language, particularly in Section 2. The phrase about calculating the deduction can be confusing for taxpayers, potentially making it difficult for them to understand how the new rules apply to their specific circumstances. Furthermore, amendments regarding penalties are described in dense legal language, which could obscure their practical effects on taxpayers. Additionally, the use of multiple cross-references to other sections of the Internal Revenue Code without clear context might lead to challenges in fully grasping the bill's implications. Finally, the bill lacks information regarding its potential fiscal impact on government revenues, making it challenging to evaluate the financial implications of the proposed changes.
Impact on the Public
For the general public, particularly individuals who do not itemize their tax deductions, this bill may provide additional tax relief when they make charitable contributions. By allowing a deduction up to one-third of the standard deduction, more taxpayers could be incentivized to contribute to charitable causes, thus fostering increased support for non-profits and community organizations. However, the complicated legal language used in the bill could result in confusion and misinterpretation among taxpayers, leading to difficulties in taking full advantage of the new deduction.
Impact on Specific Stakeholders
Taxpayers Who Do Not Itemize: This group stands to benefit directly from the proposed changes as they can claim more deductions through their charitable contributions. This might encourage greater charitable giving, aligning tax incentives with personal philanthropy.
Charitable Organizations: Non-profit and charitable organizations could see a positive impact as potential donors might feel encouraged to increase their charitable giving due to favorable tax incentives. This could lead to greater financial support and stability for charitable programs.
Government Revenue: Without clarity on the fiscal impact, there is speculation that these incentives might lead to reduced tax revenue. If the enacted changes significantly diminish tax receipts, this could have broader implications for federal budgets and public spending.
Tax Professionals and Advisors: This bill could increase the demand for tax advisory services as individuals seek professional guidance to understand and navigate the complexities introduced by the new deduction rules. Tax professionals might need to invest additional time in educating their clients about these changes.
In summary, while the "Charitable Act" aims to encourage charitable contributions from individuals who do not itemize their deductions, the complex language and lack of clear fiscal implications require careful consideration and clearer communication to ensure the public effectively benefits from the legislation.
Issues
Section 2: The complex language used in defining the deduction, particularly the phrase 'so much of the deduction determined under this section (without regard to this subsection),' might be difficult for the average taxpayer to understand. Simplification or clarification is needed to ensure taxpayers realize how the changes will affect them.
Section 2: The amendments related to penalties are communicated with dense legal language which could obscure the practical effects on taxpayers. It is important to make the implications clear to avoid confusion among taxpayers regarding their responsibilities and potential liabilities.
Section 2: The multiple cross-references to other sections of the Internal Revenue Code make it difficult for readers to fully understand the impact of the changes without additional context, which could lead to misunderstandings about the bill's implications.
Section 2: There is no indication of the fiscal impact of these changes on government revenue. Without this information, it is difficult to assess whether the repeals and revisions would lead to loss of revenue or significant financial impact.
Section 1: The brevity of the 'Short title' section lacks details about the provisions or implications of the 'Charitable Act,' making it hard for the public to grasp the full scope and objectives of the bill.
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.