Tuesday June 16, 2026
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CHARITABLE GIVING INCENTIVES
TITLE I -- CHARITABLE GIVING INCENTIVES
SEC. 101. DEDUCTION FOR PORTION OF CHARITABLE CONTRIBUTIONS TO BE ALLOWED TO INDIVIDUALS WHO DO NOT ITEMIZE DEDUCTIONS.
IN GENERAL. -- Section 170 (relating to charitable, etc., contributions and gifts) is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (l) the following new subsection: "
(m) DEDUCTION FOR INDIVIDUALS NOT ITEMIZING DEDUCTIONS. -- In the case of an individual who does not itemize deductions for any taxable year, there shall be taken into account as a direct charitable deduction under section 63 an amount equal to the amount allowable under subsection (a) for the taxable year for cash contributions, but only with respect to such contributions which exceed $250 ($500 in the case of a joint return), but do not exceed $500 ($1,000 in the case of a joint return).".
(b) DIRECT CHARITABLE DEDUCTION. - IN GENERAL. -- Subsection (b) of section 63 (defining taxable income) is amended by striking "and" at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting ", and", and by adding at the end the following new paragraph: "(3) the direct charitable deduction.". (2) DEFINITION. -- Section 63 is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection: "(g) DIRECT CHARITABLE DEDUCTION. -- For purposes of this section, the term 'direct charitable deduction' means that portion of the amount allowable under section 170(a) which is taken as a direct charitable deduction for the taxable year under section 170(m).". (3) CONFORMING AMENDMENT. -- Subsection (d) of section 63 is amended by striking "and" at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting ", and", and by adding at the end the following new paragraph: "(3) the direct charitable deduction.".
(c) STUDY. -- (1) IN GENERAL. -- The Secretary of the Treasury shall study the effect of the amendments made by this section on increased charitable giving and taxpayer compliance, including a comparison of taxpayer compliance by those who itemize their charitable contributions with those who claim a direct charitable deduction. (2) REPORT. -- By not later than December 31, 2003, the Secretary of the Treasury shall report on the study required under paragraph (1) to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives. (d) EFFECTIVE DATE. -- The amendments made by this section shall apply to taxable years beginning after December 31, 2001, and before January 1, 2004.
SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS FOR CHARITABLE PURPOSES
(a) IN GENERAL. -- Subsection (d) of section 408 (relating to individual retirement accounts) is amended by adding at the end the following new paragraph:
"(8) DISTRIBUTIONS FOR CHARITABLE PURPOSES. -
(A) IN GENERAL. -- No amount shall be includible in gross income by reason of a qualified charitable distribution.
(B) QUALIFIED CHARITABLE DISTRIBUTION. -- For purposes of this paragraph, the term 'qualified charitable distribution' means any distribution from an individual retirement account -- "(i) which is made directly by the trustee -- "(I) to an organization described in section 170(c), or "(II) to a split-interest entity, and "(ii) which is made on or after the date that the individual for whose benefit the account is maintained has attained -- "(I) in the case of any distribution described in clause (i)(I), age 70 1/2, and "(II) in the case of any distribution described in clause (i)(II), age 59 1/2. A distribution shall be treated as a qualified charitable distribution only to the extent that the distribution would be includible in gross income without regard to subparagraph (A) and, in the case of a distribution to a split-interest entity, only if no person holds an income interest in the amounts in the split-interest entity attributable to such distribution other than one or more of the following: the individual for whose benefit such account is maintained, the spouse of such individual, or any organization described in section 170(c).
(C) CONTRIBUTIONS MUST BE OTHERWISE DEDUCTIBLE. -- For purposes of this paragraph -- (i) DIRECT CONTRIBUTIONS. -- A distribution to an organization described in section 170(c) shall be treated as a qualified charitable distribution only if a deduction for the entire distribution would be allowable under section 170 (determined without regard to subsection (b) thereof and this paragraph). (ii) SPLIT-INTEREST GIFTS. -- A distribution to a split- interest entity shall be treated as a qualified charitable distribution only if a deduction for the entire value of the interest in the distribution for the use of an organization described in section 170(c) would be allowable under section 170 (determined without regard to subsection (b) thereof and this paragraph).
(D) APPLICATION OF SECTION 72. -- Notwithstanding section 72, in determining the extent to which a distribution is a qualified charitable distribution, the entire amount of the distribution shall be treated as includible in gross income without regard to subparagraph (A) to the extent that such amount does not exceed the aggregate amount which would be so includible if all amounts were distributed from all individual retirement accounts otherwise taken into account in determining the inclusion on such distribution under section 72. Proper adjustments shall be made in applying section 72 to other distributions in such taxable year and subsequent taxable years.
(E) SPECIAL RULES FOR SPLIT-INTEREST ENTITIES. -- "(i) CHARITABLE REMAINDER TRUSTS. -- Notwithstanding section 664(b), distributions made from a trust described in subparagraph (G)(i) shall be treated as ordinary income in the hands of the beneficiary to whom is paid the annuity described in section 664(d)(1)(A) or the payment described in section 664(d)(2)(A). "(ii) POOLED INCOME FUNDS. -- No amount shall be includible in the gross income of a pooled income fund (as defined in subparagraph (G)(ii)) by reason of a qualified charitable distribution to such fund, and all distributions from the fund which are attributable to qualified charitable distributions shall be treated as ordinary income to the beneficiary. "(iii) CHARITABLE GIFT ANNUITIES. -- Qualified charitable distributions made for a charitable gift annuity shall not be treated as an investment in the contract.
(F) DENIAL OF DEDUCTION. -- Qualified charitable distributions shall not be taken into account in determining the deduction under section 170.
(G) SPLIT-INTEREST ENTITY DEFINED. -- For purposes of this paragraph, the term 'splitinterest entity' means -- "(i) a charitable remainder annuity trust or a charitable remainder unitrust (as such terms are defined in section 664(d)) which must be funded exclusively by qualified charitable distributions, "(ii) a pooled income fund (as defined in section 642(c)(5)), but only if the fund accounts separately for amounts attributable to qualified charitable distributions, and "(iii) a charitable gift annuity (as defined in section 501(m)(5)).".
SEC. 101. DEDUCTION FOR PORTION OF CHARITABLE CONTRIBUTIONS TO BE ALLOWED TO INDIVIDUALS WHO DO NOT ITEMIZE DEDUCTIONS.
IN GENERAL. -- Section 170 (relating to charitable, etc., contributions and gifts) is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (l) the following new subsection: "
(m) DEDUCTION FOR INDIVIDUALS NOT ITEMIZING DEDUCTIONS. -- In the case of an individual who does not itemize deductions for any taxable year, there shall be taken into account as a direct charitable deduction under section 63 an amount equal to the amount allowable under subsection (a) for the taxable year for cash contributions, but only with respect to such contributions which exceed $250 ($500 in the case of a joint return), but do not exceed $500 ($1,000 in the case of a joint return).".
(b) DIRECT CHARITABLE DEDUCTION. - IN GENERAL. -- Subsection (b) of section 63 (defining taxable income) is amended by striking "and" at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting ", and", and by adding at the end the following new paragraph: "(3) the direct charitable deduction.". (2) DEFINITION. -- Section 63 is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection: "(g) DIRECT CHARITABLE DEDUCTION. -- For purposes of this section, the term 'direct charitable deduction' means that portion of the amount allowable under section 170(a) which is taken as a direct charitable deduction for the taxable year under section 170(m).". (3) CONFORMING AMENDMENT. -- Subsection (d) of section 63 is amended by striking "and" at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting ", and", and by adding at the end the following new paragraph: "(3) the direct charitable deduction.".
(c) STUDY. -- (1) IN GENERAL. -- The Secretary of the Treasury shall study the effect of the amendments made by this section on increased charitable giving and taxpayer compliance, including a comparison of taxpayer compliance by those who itemize their charitable contributions with those who claim a direct charitable deduction. (2) REPORT. -- By not later than December 31, 2003, the Secretary of the Treasury shall report on the study required under paragraph (1) to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives. (d) EFFECTIVE DATE. -- The amendments made by this section shall apply to taxable years beginning after December 31, 2001, and before January 1, 2004.
SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS FOR CHARITABLE PURPOSES
(a) IN GENERAL. -- Subsection (d) of section 408 (relating to individual retirement accounts) is amended by adding at the end the following new paragraph:
"(8) DISTRIBUTIONS FOR CHARITABLE PURPOSES. -
(A) IN GENERAL. -- No amount shall be includible in gross income by reason of a qualified charitable distribution.
(B) QUALIFIED CHARITABLE DISTRIBUTION. -- For purposes of this paragraph, the term 'qualified charitable distribution' means any distribution from an individual retirement account -- "(i) which is made directly by the trustee -- "(I) to an organization described in section 170(c), or "(II) to a split-interest entity, and "(ii) which is made on or after the date that the individual for whose benefit the account is maintained has attained -- "(I) in the case of any distribution described in clause (i)(I), age 70 1/2, and "(II) in the case of any distribution described in clause (i)(II), age 59 1/2. A distribution shall be treated as a qualified charitable distribution only to the extent that the distribution would be includible in gross income without regard to subparagraph (A) and, in the case of a distribution to a split-interest entity, only if no person holds an income interest in the amounts in the split-interest entity attributable to such distribution other than one or more of the following: the individual for whose benefit such account is maintained, the spouse of such individual, or any organization described in section 170(c).
(C) CONTRIBUTIONS MUST BE OTHERWISE DEDUCTIBLE. -- For purposes of this paragraph -- (i) DIRECT CONTRIBUTIONS. -- A distribution to an organization described in section 170(c) shall be treated as a qualified charitable distribution only if a deduction for the entire distribution would be allowable under section 170 (determined without regard to subsection (b) thereof and this paragraph). (ii) SPLIT-INTEREST GIFTS. -- A distribution to a split- interest entity shall be treated as a qualified charitable distribution only if a deduction for the entire value of the interest in the distribution for the use of an organization described in section 170(c) would be allowable under section 170 (determined without regard to subsection (b) thereof and this paragraph).
(D) APPLICATION OF SECTION 72. -- Notwithstanding section 72, in determining the extent to which a distribution is a qualified charitable distribution, the entire amount of the distribution shall be treated as includible in gross income without regard to subparagraph (A) to the extent that such amount does not exceed the aggregate amount which would be so includible if all amounts were distributed from all individual retirement accounts otherwise taken into account in determining the inclusion on such distribution under section 72. Proper adjustments shall be made in applying section 72 to other distributions in such taxable year and subsequent taxable years.
(E) SPECIAL RULES FOR SPLIT-INTEREST ENTITIES. -- "(i) CHARITABLE REMAINDER TRUSTS. -- Notwithstanding section 664(b), distributions made from a trust described in subparagraph (G)(i) shall be treated as ordinary income in the hands of the beneficiary to whom is paid the annuity described in section 664(d)(1)(A) or the payment described in section 664(d)(2)(A). "(ii) POOLED INCOME FUNDS. -- No amount shall be includible in the gross income of a pooled income fund (as defined in subparagraph (G)(ii)) by reason of a qualified charitable distribution to such fund, and all distributions from the fund which are attributable to qualified charitable distributions shall be treated as ordinary income to the beneficiary. "(iii) CHARITABLE GIFT ANNUITIES. -- Qualified charitable distributions made for a charitable gift annuity shall not be treated as an investment in the contract.
(F) DENIAL OF DEDUCTION. -- Qualified charitable distributions shall not be taken into account in determining the deduction under section 170.
(G) SPLIT-INTEREST ENTITY DEFINED. -- For purposes of this paragraph, the term 'splitinterest entity' means -- "(i) a charitable remainder annuity trust or a charitable remainder unitrust (as such terms are defined in section 664(d)) which must be funded exclusively by qualified charitable distributions, "(ii) a pooled income fund (as defined in section 642(c)(5)), but only if the fund accounts separately for amounts attributable to qualified charitable distributions, and "(iii) a charitable gift annuity (as defined in section 501(m)(5)).".
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