A bill by Sen. Mike Morrell seeking to give California taxpayers dollar-for-dollar annual tax credits of between $500 and $1,000 for giving to nonprofit organizations within the state will receive its first committee hearing Wednesday.
Morrell, R-Menifee, introduced Senate Bill 1485 in February and will be making his case for the proposal before the Senate Committee on Governance & Finance.
The bill calls for a “California Universal Charitable Credit” that would permit single taxpayers to take up to $500 off of their annual tax bills, while joint filers would be eligible to reduce $1,000 in state tax liabilities for charitable donations. The bill includes carry-over provisions allowing charitable donations in excess of the caps to be applied in outlying years.
In contrast to existing law, the California Universal Charitable Credit would be a dollar-for-dollar match, meaning the entire amounts given — under the caps — could be counted to offset taxes. Only certain percentages of charitable contributions can currently be applied when residents itemize their deductions.
“I’ve had the opportunity to support and partner with several nonprofits that provide direct relief to our communities,” Morrell said.
“They know best the needs that are on the ground and are often the first that can respond during challenging times. Government can’t do everything. The state should strengthen this network by allowing taxpayers to direct more of their hard-earned dollars to organizations they are confident will deliver results.”
Morrell said he got the idea for the bill from the 1997 Arizona Charitable Credit law, which he said has helped generate an estimated $250 million for charities over the past 20 years.
The credit would restrict all tax offsets to sums given to charities that operate in California, but may not have incorporated in the Golden State.
The California Franchise Tax Board would be responsible for drawing up a list of qualifying nonprofit organizations and posting the list online.
According to a Senate Committee on Governance & Finance analysis, the state would lose about $4 billion in revenue during the first year the tax credit is available, though the losses would decline 30 percent over two years.