Preserving Charitable Tax Incentives

During the last weeks of the 2013 legislative session, the Minnesota House approved a proposal to replace Minnesota’s current charitable tax incentives with a charitable tax credit (see omnibus tax bill House File 677, page 92). The Senate version of the tax omnibus bill did not contain the provision, and House and Senate members had to reconcile this and other differences to agree on a final bill during the last weeks of the session. 

MCN and dozens of other nonprofits were concerned that this proposed change would result in some Minnesota donors who currently receive a tax benefit not being eligible for the new credit, with an unknown and potentially risky reduction in charitable giving. Although some aspects of the tax credit concept were appealing, it would have reduced the state’s commitment to charitable giving incentives, which MCN opposes. 

Together with the Minnesota Council on Foundations, the Greater Twin Cities United Way, the United Ways of Minnesota, the Jewish Community Relations Council of Minnesota and the Dakotas and GiveMN, MCN worked to educate members of the public and the legislature, focusing particularly on the Tax Conference Committee members and House and Senate leadership. 

Through a series of communications, action alerts and an op-ed opinion piece (Minnesota tax proposal could cut charitable giving), the nonprofit sector mobilized against the proposal. More than 160 nonprofits join the list of organizations that opposed this change.

During conference committee negotiations on May 15, House tax conferees dropped their proposed change to charitable tax deductions. The final omnibus tax bill did not include the provision.

MCN is grateful to the many organizations that contacted legislators and educated their supporters about the problems with the proposal.  Together, through your diligence, we successfully maintained current charitable tax deductions for Minnesota!

Facts About the Proposal

Details of the Minnesota charitable tax treatment changes proposed by the Minnesota House in 2013 are below. MinnPost also ran a story that explains the potential impact. The proposal would have:

  1. Eliminated the charitable deduction for itemizers
  2. Eliminated the charitable deduction for non-itemizers (currently equals 50 percent of contributions in excess of $500)
  3. Created a new eight percent nonrefundable individual income tax credit for charitable contributions made in excess of the greater of: 
    1. $400 ($800 for married joint filers), or
    2. two percent of the taxpayer’s adjusted gross income

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