New Regulations on Charitable Contributions and State and Local Tax Credits

New Regulations on Charitable Contributions and State and Local Tax Credits

On Aug. 23, 2018, the U.S. Department of the Treasury and the Internal Revenue Service issued proposed regulations providing rules on the availability of charitable contribution deductions when the taxpayer receives or expects to receive a corresponding state or local tax credit.

The proposed regulations are designed to clarify the relationship between state and local tax credits and the federal tax rules for charitable contribution deductions. The proposed regulations are available in the Federal Register. Under the proposed regulations, a taxpayer who makes payments or transfers property to an entity eligible to receive tax-deductible contributions must reduce their charitable deduction by the amount of any state or local tax credit the taxpayer receives or expects to receive.

Updates can be found on the Tax Reform page of IRS.gov.