0.5 Percent Floor on Deduction of Contributions Made by Individuals
Section 70425 · Sec. 70425 ·
What this chapter is about
This part puts a floor under the charity deduction for individuals. Only gifts above half a percent of income count. It fixes the order the gift types are counted in. Cash gifts keep a 60 percent ceiling.
The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70425 in the PDF
What the document says
“Any charitable contribution otherwise allowable (without regard to this subparagraph) as a deduction under this section shall be allowed only to the extent that the aggregate of such contributions exceeds 0.5 percent of the taxpayer's contribution base”
The section adds a new subparagraph (I) to section 170(b)(1) of the Internal Revenue Code of 1986 allowing a charitable contribution as a deduction only so far as the total of such contributions exceeds 0.5 percent of the taxpayer's contribution base for the year, applied by taking the contribution types in a set order: subparagraph (D), then (C), then (B), then (E), then (A), then (G).
What the document actually says
“Any charitable contribution otherwise allowable (without regard to this subparagraph) as a deduction under this section shall be allowed only to the extent that the aggregate of such contributions exceeds 0.5 percent of the taxpayer's contribution base”
That sentence, in plain words
A gift counts only above a set line. That line is half a percent of the taxpayer's base.
What this is about
Gifts below the line get no deduction. The base is a measure of income. The types of gift are counted in a fixed order.
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The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70425 in the PDF
What the document says
“the applicable carryover rule shall be applied by increasing the excess determined under such applicable carryover rule for the contribution year (before the application of subparagraph (B)) by the amount attributable to the charitable contributions”
The section adds a new subparagraph (C) to section 170(d)(1) of the Internal Revenue Code of 1986 so that where a year already carries an excess forward, the applicable carryover rule is applied by adding the amount that the 0.5 percent floor kept out. It defines a carryover rule as subparagraph (A) of that paragraph, subparagraphs (C)(ii), (D)(ii), (E)(ii) and (G)(ii) of subsection (b)(1), and the second sentence of subsection (b)(1)(B), and an applicable carryover rule as one covering contributions the floor kept out. It also inserts a cross reference into the deduction for non-itemizers.
What the document actually says
“the applicable carryover rule shall be applied by increasing the excess determined under such applicable carryover rule for the contribution year (before the application of subparagraph (B)) by the amount attributable to the charitable contributions”
That sentence, in plain words
The carryover sum is raised. It goes up by the amount the floor kept out.
What this is about
That only happens where a year already carries an excess. If not, the blocked gift is lost. Several such rules are named.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70425 in the PDF
What the document says
“For taxable years beginning after December 31, 2017, any contribution of cash to an organization described in subparagraph (A) shall be allowed as a deduction under subsection (a) to the extent that the aggregate of such contributions does not exceed the excess of--”
The section rewrites clause (i) of section 170(b)(1)(G) of the Internal Revenue Code of 1986 so that from a taxable year beginning after December 31, 2017 cash contributions to an organization described in subparagraph (A) are deductible up to 60 percent of the contribution base minus the contributions already taken into account under subparagraph (A). It also makes conforming edits to the coordination clause and to subparagraph (B), including a new ten percent adjustment.
What the document actually says
“For taxable years beginning after December 31, 2017, any contribution of cash to an organization described in subparagraph (A) shall be allowed as a deduction under subsection (a) to the extent that the aggregate of such contributions does not exceed the excess of--”
That sentence, in plain words
A cash gift to some charities may be deducted. There is a limit. It is the gap between the two figures below.
What this is about
One figure is 60 percent of the taxpayer's base. The other is the gifts already counted. The rest of the cash gift is not deductible.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall apply”Who acts: Secretary of the TreasuryHow: statuteSec. 70425 in the PDF
What the document says
“The amendments made by this section shall apply to taxable years beginning after December 31, 2025.”
The section applies its amendments to taxable years beginning after December 31, 2025.
What the document actually says
“The amendments made by this section shall apply to taxable years beginning after December 31, 2025.”
That sentence, in plain words
The changes start with tax years that begin after December 31, 2025.
What this is about
Earlier tax years are not touched. The old rules still hold for them. The date is fixed in the law.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
Each distinct thing the section does: create the 0.5 percent floor and set the order in which contribution types are taken into account, adjust the carryforward so disallowed amounts roll only from years where the limit is exceeded, rewrite the cash contribution limitation, and fix the effective date.
The coordination change inserting a cross reference into the deduction for non-itemizers, and the conforming edits to the other limitation subparagraphs, which are carried in summaries.
The section works by amending section 170 of the Internal Revenue Code of 1986, which is not indexed here, so how the charitable deduction is otherwise worked out cannot be checked against anything on this site.
