Sponsors (24)
The bill temporarily extends a tax incentive that broadens charitable deductions to non-itemizers and may boost giving, but it creates short-term budgetary costs, planning uncertainty, and potentially unclear changes to penalty rules.
Non-itemizing taxpayers (including many low- and middle-income households) can claim a charitable deduction up to the amount of their standard deduction for 2026–2027, increasing their tax benefit and likely encouraging more charitable giving during those years.
Clarifying and renumbering penalty cross-references reduces confusion for taxpayers, tax preparers, and IRS staff, easing compliance and administration.
The charitable deduction is temporary (only for 2026–2027), creating uncertainty for taxpayers and charities and complicating long-term charitable or tax planning.
Allowing a large deduction for non-itemizers in 2026–2027 could meaningfully reduce federal revenue that year, adding to deficits or crowding out other spending unless offsets are provided.
Removing subsection (l) of section 6662 and striking paragraph (9) may alter penalty availability or scope, potentially reducing deterrents or changing taxpayer liabilities in unclear ways.
Based on analysis of 2 sections of legislative text.
Introduced January 29, 2025 by James Lankford · Last progress January 29, 2025
Creates a temporary charitable contribution deduction for taxpayers who do not itemize for tax years 2026 and 2027, allowing a deduction up to the taxpayer's standard deduction for that year. It also makes technical changes to the Internal Revenue Code's accuracy-related penalty rules by removing and renumbering specified paragraphs and updating related cross-references. All amendments apply to taxable years beginning after December 31, 2025. The deduction is intended to encourage charitable giving by allowing non-itemizers to claim a portion of section 170 charitable deductions. The penalty edits are largely technical renumbering and removal of a subsection, which will require updates to IRS guidance, tax forms, and tax-preparation software.