Boston, MA – April 22, 2018 – Charitable registration deductions are on the rise, with Massachusetts becoming the 16th state in the nation to make the tax-deductible charitable contribution deduction.
The tax credit is expected to grow by more than $1 billion by 2021, with $2.5 billion earmarked for higher education, $400 million to support new research, and $800 million for other areas.
A report released Thursday by the Joint Committee on Taxation (JCT) found that the charitable deduction has grown in Massachusetts to $7,400 in 2021 from $4,000 in 2018.
“This is the third consecutive year that the tax credit has increased, and this year, the rate is set to increase again, with the largest jump in 2017,” said Jason Cipriano, a tax policy analyst with the Joint Tax Committee.
“Massachusetts is one of a handful of states to make this tax-exempt charitable contribution to support its public schools, as well as for new scientific research and education, as this is one area that the state has been making an investment in.”
The tax deduction has been on the ballot since 2002, when it was first approved by the Legislature.
This year, lawmakers approved a bill that created the tax deduction, but the proposal never passed out of committee.
It now must pass both chambers of the Legislature to become law.
Massachusetts is also one of only six states that does not require a state-issued ID card to qualify as a tax-free charitable contribution.
The new deduction is expected increase Massachusetts’ tax-base, as more people are able to deduct charitable contributions.
“Our tax code has evolved to allow a tax deduction of this size,” said Sen. John Malloy, a Democrat from the state’s second largest city.
“It’s one of those things that really gets people’s attention, especially if you’re in a lower tax bracket, and it helps keep those tax brackets affordable.”
While the tax deductibility was on the table for many years, Malloy said he did not support it until he learned about the state government’s plan to make charitable contributions tax-deferred.
“The idea that people in Massachusetts, especially in the middle class, are going to lose their tax deduction for the charitable contribution is just unacceptable,” Malloy told the Boston Globe.
The deduction has helped Massachusetts raise more than a billion dollars from individuals, businesses, and foundations.
While it is possible for individuals to claim the deduction, the state requires individuals to complete a tax return, complete an application form, and pay an annual filing fee of $1,000.
The bill approved Thursday will allow individuals to deduct up to $2,500 in charitable contributions that exceed $500.
The charitable contribution deductions increase the tax burden on small businesses, who are already burdened by the state sales tax and property tax.
“I think we should be giving people incentives to get to work, to pay their bills, and contribute to our communities,” said state Treasurer Josh Gottheimer, a Republican.
“We can help our citizens do that.”
The deduction is available for individuals and businesses up to a total of $5,000 for individuals, $10,000 per qualifying entity, and up to five qualifying entities, with a maximum of $50,000 of taxable income.
Individuals may claim the tax deductions up to twice a year, or in certain cases, quarterly, according to the JCT.
For more information on the charitable tax deduction or to apply for the tax benefit, visit www.
Related stories: Massachusetts will not tax your contributions for tax year 2021: Tax deduction set to grow, JCT says State’s millionaires will have to pay more taxes: A look at the tax bill to make your charitable contribution tax-deductible: The Tax Foundation reports Mass.
will have a net loss of more than 5.1 billion dollars, as of the end of 2021: