April 17, 2018
Taxpayers May Donate to Charities When Paying Income Tax. State taxpayers may voluntarily contribute to one or more charitable funds and programs when they file their personal income tax returns. As we show in the below figure, this year's personal income tax return for the 2017 tax year includes 24 of these Voluntary Contribution Funds. Many commonly refer to these as voluntary contribution tax “check-offs.” To contribute to one of these funds or programs, taxpayers specify the amount of money in the box next to the fund or funds to which they want to contribute. Their donations are then subtracted from their refunds or added to the amount owed.
Tax Check-Offs in the 2017 State Income Tax Return
Check-Off Donations Declined by 36 Percent in 2017. Last year, taxpayers donated about $3.7 million in total through tax check-offs. This was a decline of more than 36 percent from the $5.7 million donated in the prior year. This decline was anomalous because contributions generally were increasing roughly 4 percent on average annually. The Franchise Tax Board determined that a major tax preparation software publisher made changes to their product that likely contributed to this decline. Tax check-offs are automatically repealed if they do not receive a minimum amount of contributions. The 2017-18 budget package reduced these minimum contribution requirements last year.
Donations Have Increased Significantly So Far This Year. Taxpayers filing their 2017 income tax returns have donated nearly $2.7 million through March 2018. That amount is a 160 percent increase over the $1 million total over the same period last year.