Fiscal Cliff legislation aids donors

By Bennie L. Harris on 1/4/2013



Fiscal cliff legislation passed by the U.S. Congress offers several points of good news for donors to Lipscomb University and charities throughout the nation.

Perhaps the best news is that the legislation preserved the charitable deduction, at least for now. An individual’s charitable deduction rate remains equal to his or her marginal tax rate. Rates remain unchanged for all earning less than $400,000, and increased to 39.6 percent for individuals earning $400,000 or more ($450,000 for married taxpayers filing jointly).

In something of a surprise, Congress maintained the exemption for estate and gift tax purposes, exempting the first $5 million of an estate and taxing the remainder at a 40 percent rate. The $5 million exemption is now indexed for inflation.

The IRA charitable rollover was extended to Dec. 31, 2013, and is fully retroactive to Jan. 1, 2012. Gifts made from traditional or Roth IRAs before the end of January 2013 are considered to have been made in 2012. Taxpayers who took a withdrawal during December 2012 may make a cash contribution of all or part of the amount of the withdrawal, up to $100,000, and the gift will be treated as a direct distribution to charity that qualified as an IRA Rollover gift for 2012.

Although Congress preserved the charitable deduction, it did reinstate the Pease Amendment. The Pease limitation reduces total itemized deductions (including charitable deductions) by three percent of the amount a taxpayer’s adjusted gross income exceeds a threshold amount, which is $250,000 for individuals and $300,000 for married taxpayers filing jointly. 

The new law may not put an end to future discussions about limiting charitable deductions, but we are grateful that Congress has left the charitable deduction – and the philanthropic encouragement it provides to Lipscomb’s alumni and friends – in place.

For a more complete summary of the impact of the American Taxpayer Relief Act of 2012, please visit Lipscomb’s Gift Planning website.


Dr. Bennie Harris is vice president for development and alumni relations at Lipscomb University. He may be reached at 615.966.6220, 800.333.4358, ext. 6220, or by e-mail at