I had realized that once the SALT limit was adopted in Dec 2017. We actually prepaid our property taxes in Dec 17 knowing we’d be able to itemize more that tax year and would be taking standard deduction this year.
But I wonder what will be the long term impact on amounts of charitable contributions when people who itemized before and now taking the standard deduction, realize that they effectively no longer get any deduction for them. Or even for people who will still itemize but are not getting a tax deduction on a large fraction of their charitable contributions.
For example, could people start bunching up their charitable contributions (like in donor-advised funds)? Or simply factor in the loss of tax deduction at their marginal rate and give that much less?
As someone dealing with the budget for our church, it’s a major concern. 2018 was down 1.6% in donations but my intuition is that two things were balancing there. People had a bit more money due to the tax cut but some gave less due to loss of itemizing due to SALT limit. Of course, it could all be random fluctuations but it was the first year in almost 10 that donation revenues were down so I think it’s statistically significant. I just hope it doesn’t continue to decrease once people who had not realized they would not get a tax deduction scale down their donations.