June 25, 2002 | WebMemo on Taxes
The Charity Aid, Recovery, and Empowerment (CARE) Act (S. 1924) offers generous tax incentives to increase private giving. However, CARE's tax incentives may not generate the increase in charitable giving the bill's authors envision.
CARE enacts two important changes to tax law which are likely to increase charitable contribution because of their significant reduction in taxes and the potential for these groups to change giving patterns in a short time period.
Other tax incentives include: restoring the deductibility of charitable giving for individuals who use standard (non-itemized) deduction; relaxing limits on the deductibility of books, food, and bonds for corporate donors; and reducing the excise tax rate from 2 percent to 1 percent for nonprofit foundations and trusts.