The Fiscal Cliff Deal and Fund-Raising

January 4, 2013

In the weeks before Congress reached a last-minute agreement on the expiring Bush-era tax cuts, a proposed cap on deductions for charitable giving alarmed colleges and universities. That wasn't included in the final compromise to avoid the "fiscal cliff," but one provision does slightly dent the tax advantage for donations, including to colleges. The package Congress voted on Tuesday reinstates the Pease Amendment, which reduces the value of tax deductions for wealthy households. The value of deductions is reduced by 3 percent of a taxpayer's income over a certain threshold -- $300,000 for taxpayers married and filing jointly, $150,000 for married taxpayers filing separately and $250,000 for unmarried individuals.

The Pease limitation is a concern, said Brian Flahaven, director of government relations for the Council for Advancement and Support of Education. But the group was far more worried about the proposed deduction cap or other limitations. "Anything that increases the cost of giving, and this would, certainly could lead to some decline in giving," Flahaven said. "The effect is much less than a cap."

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