House Approves Non-Itemizer Charitable Deduction

The House of Representatives has approved a bill that would permit not-itemizing taxpayers to deduct on their tax returns up to $25 per year in charitable giving, beginning in 2002. For a taxpayer in the 15 percent bracket, this would represent approximately $3 in tax savings.

Under the terms of the House bill, the amount of allowable deduction for charitable contributions would increase to $100 over the next ten years. The amounts would double for married filing jointly taxpayers.

In addition, the House bill includes a provision that would allow taxpayers age 70 1/2 or older to make tax-free distributions from their individual retirement accounts if the funds are used as charitable contributions. No charitable deduction would be allowed for a contribution of this type.

The bill faces a stiff hurdle in the Senate, where support for this legislation is not widespread.

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