As part of the state’s budget planning for fiscal-year 2021, Governor Baker’s administration passed legislation that delays the Massachusetts charitable deduction until 2022. Massachusetts residents were scheduled to be able to deduct charitable contributions on beginning with the 2021 tax year for the first time since 2001.

Beginning in 2022, Massachusetts taxpayers may deduct charitable deductions on their state return, whether or not they itemize deductions for federal tax purposes. The deduction will be prorated for part-year residents, as well as non-residents earning income in Massachusetts. Please note that donations of household goods or used clothing are not deductible for Massachusetts state income tax.  Otherwise, deductible contributions on the state level must meet the IRS’s requirements.

Because of this one-year delay, some CPAs are advising their clients to accelerate charitable contributions into 2020, since there is no state tax benefit gained by delaying contributions until early 2021. Taking the deduction in 2020 might also be beneficial from a federal tax standpoint, given the uncertainty as to how President-Elect Joe Biden’s proposals could change the tax law in 2021.

As with any tax planning, it is imperative to work with qualified advisors to evaluate these matters, as each individual’s situation is unique. Please contact me or a member of your JDJ team for assistance.