Other Federal Charitable Giving Incentives

The Estate Tax

The federal estate tax is an essential source of revenue for the federal government and serves as an incentive for wealthier individuals to give back to their communities through nonprofit organizations. In the American Taxpayer Relief Act of 2012, Congress set the individual exemption at $5.12 million ($10.24 million for a couple), both of which numbers are indexed to inflation, and set the rate of taxation at 40 percent.

The IRA Rollover

The IRA charitable rollover allows individual taxpayers older than 70 ½ years to donate up to $100,000 from their individual retirement accounts (IRAs) and Roth IRAs to charitable nonprofits without having to treat the withdrawals as taxable income. The IRA Rollover was restored retroactively in 2014 but expired on December 31, 2014. The America Gives More Act and other legislation in 2014 sought to make the IRA rollover and other charitable provisions permanent.

Food Inventory Donations

The food inventory enhanced tax credit allows individuals, businesses, and corporations to donate wholesome food to nonprofits and deduct their cost basis plus one-half the difference between their cost and the market value of the donated goods. The value of the credit could not exceed twice the cost basis of the product donated. The food inventory giving incentive was restored retroactively in 2014 but expired on December 31, 2014. The America Gives More Act and other legislation in 2014 sought to make the food inventory and other charitable provisions permanent.

Land Conservation Easements

Under a conservation easement, a landowner voluntarily agrees to donate or sell certain rights associated with his or her property, such as the right to subdivide or develop, and a private organization or public agency agrees to hold the landowner’s promise not to exercise those rights. In exchange, the property tax burden of the land is lowered relative to its value. This incentive, according to The Nature Conservancy, helped preserve over 2 million acres as of June 30, 2003. The land conservation giving incentive was restored retroactively in 2014 but expired on December 31, 2014. The America Gives More Act and other legislation in 2014 sought to make the land conservation and other charitable provisions permanent.