The TCJA May Help Nonprofits Next Year: Here’s Why
A potential TCJA extension could help nonprofits. But is it enough to keep up with inflation?


There’s been a lot of talk about the Tax Cuts and Jobs Act (TCJA). As Kiplinger has reported, the Trump administration tax overhaul (also known as the “Trump tax cuts”) lowered marginal tax rates, almost doubled the standard deduction, and slashed some tax breaks. Some of the law’s provisions are set to expire in 2025.
However, with a GOP-controlled White House, Senate, and House in 2025, a potential renewal of the TCJA may be coming.
In the year the TCJA became effective, 46 million filers stopped itemizing due to the standard deduction increase. Since itemized charitable contributions were no longer available to increase deductions for these filers, there was a period of volatility in charitable giving immediately before and after the TCJA was enacted, according to the Tax Foundation.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
But do itemized deductions directly correlate to gifts to charity? In what ways are the TCJA and charitable giving tied together?
Here are some ways a TCJA extension may help charities, and how you can give back to your local community.
Inflation is impacting charitable giving
According to Giving USA, charitable giving is currently up in terms of dollars, but down when adjusted for inflation. For example, in 2023:
- Individual giving increased 1.6%
- But when adjusted for inflation, donations had actually declined by 2.4%
High inflation typically affects individuals with lower incomes the most. However, as income levels rise, more and more people make charitable gifts, according to Philanthropy Roundtable, a nonprofit philanthropist network. Thus, in terms of charitable giving, high inflation can affect those who are more likely to give larger dollar amounts, like high- and middle-income households.
In fact, the Roundtable shows that middle-class individuals donate about 2-3% of their money annually, which is nothing to sneeze at, considering that the Pew Research Center reports about 51% of the U.S. population is middle-income.
Even if the relationship between charitable giving and inflation is complex, there exists a negative relationship between inflation and monetary donations, as NPR reports. So perhaps a better question would be: why hasn’t charitable giving declined more due to high inflation’s impact on most of the country?
The TCJA and high-income earners
High-income individuals compose about one-third of all individual gifts in the U.S..
And since high-earners are less likely to be affected by high inflation, TCJA savings can still be used for charitable purposes.
A recent report by the Tax Foundation shows that lower marginal tax rates, like those introduced with the TCJA, have a stronger positive effect on charitable giving than incentivized itemization.
The Foundation also reports that, when the TCJA increased the charitable contribution deduction rate from 50% to 60%, wealthier itemizers may have been encouraged to give more than they had previously.
But upper-income individuals make up only 19% of the U.S. population. So while the majority of folks do not have large amounts of disposable income, there may be more ways you can help slow the decline in inflation-adjusted giving.
More nonprofits but less charitable giving: How you can help
While giving, adjusted for inflation, is on a decline, there is a record-high number of nonprofits. And that number is climbing, according to the U.S. Bureau of Labor Statistics.
Per Giving USA, here are the nonprofit sectors that have seen more than 5% inflation-adjusted growth compared to last year:
- Education grew by 6.7%
- Foundations grew by 10.8%
- Public-society benefit (charities fundraising through government grants or other public means) grew by 7.2%
- Arts, culture, and humanities grew by 6.6%
Giving USA also reported that these segments coincided with the giving priorities of the wealthiest donors. So if you would like to help a charity that may not be a priority for high-income earners, here are a couple of ideas:
- Give to your community’s women’s shelter, toy drive, or food bank
- Volunteer at your place of worship, community hospital, or pet shelter
Data show the highest giving year of all time came just three years after the TCJA was enacted, the Tax Policy Center estimates that 53% of taxpayers could see an increase in their tax burden if certain provisions in the TCJA are left to expire.
The U.S. has seen all sorts of questions bubbling up regarding how these other key issues will be handled in the new year. Republicans may want to extend many parts of the bill, although government debt and deficit hawks could want to compromise on some of the provisions.
But while the TCJA doesn't expire until the end of 2025, charities may have a reason to hope for an extension — that is, if inflation goes down.
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Kate is a CPA with experience in audit and technology. As a Tax Writer at Kiplinger, Kate believes that tax and finance news should meet people where they are today, across cultural, educational, and disciplinary backgrounds.
-
Donating Complex Assets Doesn't Have to Be Complicated
If you're looking to donate less-conventional assets but don't know where to start, this charity executive has answers, such as considering a donor-advised fund (DAF) for its tax benefits and ease of use.
-
Travel trends you can expect this summer
The Kiplinger Letter Domestic trips will trump foreign travel amid economic uncertainties, though some costs are down.
-
The GOP Wants to Auto-Enroll Your Child in a MAGA Savings Account
Tax Law The federal government could auto-enroll your kid in a tax-advantaged ‘MAGA savings account’ if the latest House GOP tax plan becomes law.
-
Missouri Leads Capital Gains Tax Repeal: Will Your State Follow?
State Tax As one state becomes a test case, policymakers and taxpayers across the U.S. will be watching closely to see what happens next.
-
Here's How the Child Tax Credit Could Increase Under Trump
Tax Credits House Republicans released details on President Trump’s ‘one big, beautiful bill,’ including an increased child tax credit.
-
New Overtime Tax Deduction Proposed for Millions Working Extra Hours
Tax Law Some lawmakers and President Trump want to offer overtime tax relief. But will a tax deduction or an exemption help you most?
-
Big Tax Deduction Increase Proposed for Those Over Age 65
Tax Deductions A new bipartisan bill and a tax plan from the House GOP could mean bigger retirement tax savings to offset taxes on Social Security and high prices.
-
‘My Etsy Shop is Dead’: Vendors Cry for Help Amid Trump’s Tariffs
Tariffs Small businesses are struggling to thrive as they absorb the Trump administration’s new wave of tariffs.
-
2025 Tax Reform: Are Trump and the GOP Actually Planning to Raise Taxes?
Tax Reform As high-stakes tax reform talks resume on Capitol Hill, questions are swirling about what and President Trump and the GOP will do.
-
Trump’s Tax Cut Risks Your SNAP, Medicaid Benefits
Tax Cuts The GOP budget blueprint could slash lifesaving programs for millions of U.S. households.