House Votes to Extend Retirement Giving Break

When the House of Representatives passed its controversial Responsible Tax Relief Bill this month, it also voted to extend a tax incentive that allows older donors to deduct money contributed to charities through their individual retirement accounts.

The incentive, which allows tax-free charitable contributions for taxpayers age 70 1/2 from their IRA accounts, is scheduled to expire on December 31. The House bill would extend the provision for another year.

Many nonprofit groups and foundations have been pushing for an extension of the incentive, saying that it gives donors more flexibility and that it encourages giving.

Some organizations, including the Association of Fundraising Professionals and the National Committee on Planned Giving, have also been lobbying to expand the incentive to include younger donors and to cover contributions to donor-advised funds.

Those measures are not included in the bill.

The bill, is facing considerable opposition in the Senate — largely because it changes the tax rules for investors and business groups. President Bush has expressed opposition to the bill, saying that while it makes needed reforms to the alternative minimum tax, it raises taxes for too many others.