Keith Mack
President Trump's second term has brought about significant changes in tax policies, including the Tax Cuts and Jobs Act (TCJA) of 2017. This legislation substantially altered the way Americans file their taxes, providing both incentives and disincentives that have impacted non-profits and churches. The TCJA reduced the marginal tax benefit of donating to charities, leading to a reported decline in charitable giving. Religious congregations are likely among the most affected by this change as they rely primarily on donations from their members. The Trump administration's decision not to enforce the Johnson Amendment, which bars churches from directly involving themselves in political campaigns, has also raised concerns about the potential influence of dark money in politics. These changes have sparked discussions about the possible implications for churches and their donations.
| Characteristics | Values |
|---|---|
| Charitable donations decreased by | $54 billion |
| Charitable donations decreased by (percentage) | 3.4% |
| Charitable donations from individuals decreased by (percentage) | 1.1% |
| Number of taxpayers itemizing deductions | 18 million (down from 46.5 million) |
| Percentage of filers taking the standard deduction | 88% |
| Number of charitable and nonprofit organizations that sent a letter to Congress in support of the Johnson Amendment | 5,800 |
| Year the Johnson Amendment was passed | 1954 |
| Year Trump decided not to enforce the Johnson Amendment | 2019 |
| Year Trump was re-elected for a second term | 2025 |
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What You'll Learn
The Tax Cuts and Jobs Act (TCJA)
The law created a single flat corporate tax rate of 21%, down from 35% previously, which was higher than the OECD average of 25%. The TCJA also cut taxes for most US taxpayers, including shareholders and individual taxpayers. According to the Tax Policy Center, the TCJA lowered individual income taxes for approximately 65% of US households, raised them for about 6%, and left the remainder unchanged. The reform also removed the mandate requiring individuals to purchase health insurance, a key provision of the Affordable Care Act.
The TCJA changed deductions, depreciation, expensing, tax credits, and other items affecting businesses. It increased the standard deduction and family tax credits, eliminated personal exemptions, and made itemizing deductions less beneficial. For instance, it limited the mortgage interest deduction for married couples filing jointly to $750,000 worth of debt. The TCJA also impacted individuals based on their income level, filing status, and deductions.
The TCJA's effects on charitable giving have been notable. It reduced the marginal tax benefit of donating to charities, increasing the after-tax cost of donations. This led to a decline in overall charitable giving, with Americans itemizing $54 billion less in charitable donations in 2018. Religious congregations were likely among the most affected, as most of their donors are also members.
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Religious Freedom Restoration Act (RFRA)
The Religious Freedom Restoration Act (RFRA) of 1993 is a legislation aimed at protecting the free exercise of religion. While it initially applied to both state and federal laws, the Supreme Court ruled in 1997 that the RFRA does not apply to state governments, as it is not a proper exercise of Congress's enforcement power. However, it continues to be applied to the federal government, holding it responsible for protecting religious exercise.
The RFRA has been cited in several court cases, including Burwell v. Hobby Lobby Stores, Inc. (2014), where it played a prominent role in oral arguments before the Supreme Court. The Court's decision in this case reaffirmed that the RFRA governs the actions of federal officers and agencies and can be applied to the "internal operations of the federal government."
Another notable case is Tanzin v. Tanvir (2020), which determined that the RFRA allows individuals whose religious rights are adversely affected by federal officers acting on behalf of the government to seek remedies, including monetary damages. This case involved three Muslim men who were placed on the No Fly List by FBI agents for refusing to be informants within their communities.
The RFRA has also been central to Native American tribes' efforts to protect sacred sites and religious rites. In conjunction with President Bill Clinton's executive order in 1996, it provided increased protection for these cultural practices.
In terms of its limitations, the RFRA does not exempt individuals from federal income taxes, even if their religious beliefs conflict with paying these taxes. This was demonstrated in the case of Adams v. Commissioner, where the United States Tax Court ruled against Priscilla M. Lippincott Adams, a devout Quaker who argued for tax exemption under the RFRA.
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$32.45
Johnson Amendment
The Johnson Amendment is a provision in the federal tax code Section 501(c)(3) that prohibits any organization with this designation from participating in, or intervening in any political campaign on behalf of or in opposition to any candidate for public office. This includes publishing or distributing statements that support or oppose a particular candidate. The amendment applies to any 501(c)(3) organization, not just religious ones.
The benefit of 501(c)(3) status is that the organization is exempt from taxes, and donors who itemize may also take a tax deduction for their contributions. The rationale behind the Johnson Amendment is to prevent taxpayers from effectively paying for political campaigns through lost tax revenue. The amendment also ensures that organizations dedicated to the public good remain above the political fray.
The Trump administration decided not to enforce the Johnson Amendment, which has raised concerns about the potential for political campaign contributions to be funnelled through 501(c)(3) organizations, which would make them tax-deductible for donors. There are also concerns about a lack of transparency, as churches are exempt from reporting requirements. In addition, some worry that this could damage public trust in nonprofit and religious organizations if they begin endorsing political candidates.
There have been several attempts to defend and preserve the Johnson Amendment, including legal challenges and letters of support from thousands of organizations, faith leaders, and religious groups. Despite these efforts, in July 2025, the IRS carved out an exception to the amendment, stating that churches could endorse political candidates in their "usual channels of communication" without facing tax consequences.
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The impact on middle-class donors
The Tax Cuts and Jobs Act (TCJA) of 2017, signed into law by President Trump, significantly changed the way Americans file their taxes. The Act included an increase in standard deductions, which meant that the number of taxpayers itemizing deductions decreased. This had a notable impact on charitable giving, as those who took the standard deduction could not write off their donations.
For middle-class donors, the new tax law meant that the tax benefit of donating to charities was reduced by 30% in 2018, resulting in a higher after-tax cost of making donations. This disincentivized charitable giving, particularly for those in the middle class who may have previously enjoyed the tax break associated with charitable donations. The impact on lower-income individuals was also significant, as they tend to have lower itemized deductions and are more likely to be financially disincentivized to donate.
The overall giving to charity organizations declined by 1.7% in 2018, with a 1.1% decline in donations from individual Americans. This represented a $54 billion drop in charitable donations. The decrease in charitable giving was likely due to the tax law changes, as other factors such as GDP growth and household income growth would typically lead to an increase in individual giving.
Nonprofits and churches, which rely heavily on donations, were particularly affected by the decline in individual contributions. Religious congregations were especially vulnerable as most of their donors are also members. While some predicted a substantial decrease in contributions, the most recent data did not show the most dire estimates. However, the impact on middle-class donors may have contributed to the overall decline in charitable giving.
To adapt to these changes, nonprofits may need to shift their focus to targeting fewer, more wealthy donors who can maximize their charitable contributions. Additionally, middle-class donors who regularly donate to charities may need to reconsider their giving strategies to maximize their tax benefits. This could include bundling donations or donating to donor-advised funds.
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The effect on small- to medium-sized churches
The Tax Cuts and Jobs Act (TCJA), signed into law by President Trump in 2017, brought about the most significant changes to the US tax code in over three decades. The Act's impact on charitable giving has been a particular area of concern for nonprofits and religious institutions.
Small- to medium-sized churches, in particular, may experience challenges due to the new tax law. These churches often rely heavily on the financial contributions of their members and attendees. With the increase in standard deductions, fewer individuals will benefit from the tax break associated with charitable donations, potentially reducing the incentive to give. This could result in a decline in donations for these churches, especially if their donors are primarily lower-income individuals with lower itemized deductions.
Additionally, small- to medium-sized churches may be affected by changes to unreimbursed ministry-related expenses. Previously, pastors and ministry staff could claim these expenses on their personal tax returns. However, starting in 2018, this type of deduction is no longer permitted. Churches will now need to implement expense reimbursement policies to adequately track and reimburse their employees for ministry-related expenses.
The impact of the tax law changes on religious congregations is likely to be significant. Unlike other nonprofits, congregations do not typically receive donations from corporations or foundations. As a result, they may be more vulnerable to fluctuations in individual contributions. However, it is important to note that religious faith, rather than tax relief, is often the primary motivator for donations to churches. Therefore, while small- to medium-sized churches may experience some financial strain due to the tax law changes, they may not see a substantial decrease in overall giving.
Furthermore, the Trump administration's decision to stop enforcing the Johnson Amendment, which barred churches from directly involving themselves in political campaigns, has created new concerns. While churches have always been free to express opinions, the tax-exempt status of donations to religious organizations could now be exploited for political purposes, allowing donors to indirectly influence elections through tax-deductible contributions. This development has raised questions about the role of religious institutions in politics and the potential for ""dark money" to influence campaigns.
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Frequently asked questions
Yes, church donations went down after Trump's tax law. The Tax Cuts and Jobs Act (TCJA) reduced the marginal tax benefit of donating to charities by 30% in 2018, which raised the after-tax cost of making a donation by 7%. This resulted in a 1.7% decline in overall giving to charity organizations and a 3.4% decline when adjusted for inflation.
Trump's tax law increased the standard deduction, which meant that fewer taxpayers itemized their deductions. In 2018, only about 18 million taxpayers itemized their deductions, down from 46.5 million the year before. This decrease in itemized deductions is likely to impact charitable giving, as individuals may no longer receive a tax benefit for their donations.
Trump's tax law has made it less financially advantageous for individuals to donate to charities, including churches. This may result in a decrease in charitable giving, especially from lower-income individuals who may no longer receive a tax break for their donations. Religious congregations are likely to be among the most affected by the decline in individual contributions.
