Paulsen proposal permits Americans to make charitable donations with pretax income

Americans would be able to commit tax-free charitable amounts from their pre-taxed paychecks under a bipartisan bill introduced on July 26 by U.S. Rep. Erik Paulsen (R-MN).

“Americans are the most generous charitable givers on the planet, and philanthropy is the lifeblood of countless non-profit groups that do vital work in Minnesota,” Rep. Paulsen said. “But the majority of taxpayers who don’t itemize their deductions see no tax benefit from their giving.”

If enacted, H.R. 6616 would allow employers to offer their employees the option to divert some of their pre-tax earnings into a new Flexible Giving Account, which would be established as part of their benefits package, according to an Aug. 3 statement released by the congressman’s office. Taxpayers could distribute the funds to qualified charities of their choice tax-free, the statement said.

“Flexible Giving Accounts will be game-changers,” said Rep. Paulsen. “They’ll spur more giving by making it easier for American families to make regular contributions to charities of their choice and will mean less paperwork for taxpayers.”

The goal of a Flexible Giving Account, which would resemble a Health Savings Account, would give the millions of taxpayers who take the standard deduction and don’t itemize their federal income taxes to receive a tax deduction, his office noted.

“Every day in this country, charities are changing lives and improving communities,” said U.S. Rep. Mike Gallagher (R-WI), an original cosponsor of H.R. 6616. “By empowering more Americans to set aside their hard-earned money each month, tax free, for charitable giving, this bipartisan bill would incentivize a culture of everyday philanthropy that in turn would deepen and diversify the country’s giving pool.”

Three Democrats and one other Republican joined Rep. Gallagher as original cosponsors of H.R. 6616, which Rep. Paulsen lead sponsored as a member of the U.S. House Ways and Means Committee where the bill has been received for consideration.