New Jersey Charitable Giving Incentive

State Income Tax Charitable Deduction Dropped from Transportation Trust Fund Package

Updated October 17, 2016

The latest compromise package negotiated by Governor Christie and Senate and Assembly Leaders to end the impasse over the Transportation Trust Fund does not include a New Jersey income tax deduction for contributions to charity. A New Jersey income tax deduction for contributions to certain charities was passed by the Senate Budget and Appropriations Committee and the Assembly Budget Committee on June 23, 2016 as part of a larger deal which would have also increased gasoline taxes to fund the Transportation Trust Fund, phased out the estate tax, increased the earned income tax credit, among other provisions.  That deal fell apart in late June when the Governor and Assembly Speaker separately negotiated a package that included a sales tax reduction instead of some of the elements of the earlier bill. The new TTF package, which was signed into law on October 14, 2016, includes a 23-cent/gallon increase in the gas tax; increase in the Earned Income Tax Credit; a phaseout of the estate tax in New Jersey; tax deductions for retirement income; a tax deduction for veterans; and a reduction in the sales tax. 

The Center for Non-Profits has a long-standing position in strong support of a state-level charitable giving incentive. Our recent survey report, New Jersey Non-Profits 2016: Trends and Outlook, has raised significant concerns about the ability of chronically under-funded organizations to meet ever-increasing community needs. Moreover, New Jersey is among the minority of states without any state-level giving incentive, and IRS data indicate that charitable giving, as measured by federal charitable tax deductions claimed by New Jersey households, was still below 2007 pre-recession levels in 2013.

While we are disappointed that the charitable deduction was dropped from the final package, we remain committed to pursuing initiatives that would encourage greater charitable giving.

For more information about the charitable giving proposals, contact Linda Czipo at the Center or email lczipo @ njnonprofits.org.

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Charitable giving deduction bills introduced in the current session include:

  • S-2411 (Sarlo/Oroho) / A-11 (Prieto) would create a New Jersey charitable income tax deduction the deduction, applicable to contributions made to New Jersey safety net organizations that are eligible to participate in the New Jersey State Employees Charitable Campaign (NJSECC), the workplace giving program for New Jersey state employees. Currently approximately 1,100 organizations participate in the NJSECC, but new charities could apply and, if accepted, be eligible for the state tax-deductible contributions under the bill. The deduction would be available to all taxpayers, not just government employees, who contribute to eligible charities, and taxpayers would be able to deduct contributions of up to 50% of New Jersey taxable income.  The deduction was part of a broader tax package to fund the Transportation Trust Fund. Other elements in the legislation include provisions to raise the Earned Income Tax Credit, phase out the estate tax, raise the taxable threshold for retirement and pension income, and increase certain taxes on petroleum products. Although this bill passed both the Senate Budget & Appropriations Committee and the Assembly Appropriations Committee, it has since been replaced by another package that does not include a charitable giving incentive. The Center supported this legislation, but has gone on record as preferring an approach that would allow the broad spectrum of charities to be able to benefit. Read our summary of S-2411/A-11
  • S-334 (Kean/Codey) would provide a New Jersey income tax deduction for charitable contributions. The deduction mirrors the federal income tax deduction and is allowed regardless of whether the federal itemized deduction is taken by the taxpayer. The bill was pre-filed for introduction in the 2016-2017 legislative session. It has been reintroduced over numerous legislative sessions but has not been scheduled for hearings during that time. Cosponsors include Senate President Sweeney and Senators Van Drew, Oroho, Doherty and Bucco. 

    S-334 has been referred to the Senate Budget and Appropriations Committee. Its Assembly companion is A-2717 (Bucco/Johnson/Munoz), which is in the Assembly Appropriations Committee.  
  • S-1932 (Kean), which would provide for a New Jersey income tax deduction for charitable contributions made to New Jersey-based charitable organizations, was introduced on March 10, 2016, and has been part of the state budget discussions this spring.  Cosponsors include Senators Beck, Oroho, Bucco and Addiego. S-1932 has been referred to the Senate Budget and Appropriations Committee. Its Assembly counterpart, A-3730 (Singleton/Webber), was introduced May 19, 2016, and is in the Assembly Budget Committee.  

    S-1932/A-3730 would permit a taxpayer to deduct from NJ income taxes the amount of charitable contributions made to a “qualified New Jersey-based charitable organization” equal to the amount that is allowable as a charitable deduction under federal income taxes. Like S-334/A-2717, a taxpayer need not itemize on their federal return in order to claim the state deduction. The main difference is that S-1932/A-3730 would only allow deductions of contributions made to “qualified” New Jersey-based organizations, defined in the bill as:
    a charitable organization that is registered pursuant to the "Charitable Registration and Investigation Act," P.L.1994, c.16 (C.45:17A-18 et seq.), or an organization that is exempt from the registration requirements of that act pursuant to section 9 of P.L.1994, c.16 (C.45:17A-26), and that maintains an office, employs persons, and provides services in this State. [emphasis added]
  • S-2383 (Beck) would provide a New Jersey income tax deduction for charitable contributions as part of a larger bill that would also reduce the estate tax, increase the earned income tax credit, and provide certain other deductions for fuel purchases and retirement income. The charitable deduction would be similar to that provided in S-334. The bill was introduced June 20 and referred to the Senate Budget and Appropriations Committee. Assembly Appropriations Committee.  

For more information about the charitable giving bills or the Center’s positions, contact Linda Czipo at the Center or email lczipo @ njnonprofits.org

Read our blog - Why New Jersey Needs a Charitable Giving Deduction

 

 

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