Maryland Gov. Wes Moore’s proposed budget would double taxpayers’ standard deduction while eliminating charitable donations and other itemized deductions, such as mortgage interest and child care expenses.

Proponents frame the idea as a simplification of the state’s tax code and note that few households actually claim itemized deductions for charitable donations. A 2023 state report showed that just under 625,000 of the roughly 3.2 million Marylanders — about 19.5% — who filed returns claimed an itemized deduction.

Moore’s senior press secretary, Carter Elliott, characterized tax breaks for charitable donations as an incentive that disproportionately benefits the wealthy because most middle-class donors do not itemize deductions.

“Marylanders give to charity to support their communities and the causes they care about,” Elliott said in an emailed statement. “To the extent anyone gives for tax benefits, it’s extremely wealthy households who want the far larger federal tax benefit which will continue to serve as the main incentive for those looking for potential tax benefits.”

But in an environment of uncertain federal support for charities, nonprofit leaders worry the governor’s proposal will hit them where it hurts.

“We know from history that eliminating itemized tax deductions significantly and negatively impacts giving to nonprofit organizations,” said Jeannie Howe, Executive Director of the Greater Baltimore Cultural Alliance. “The currently proposed change in Maryland will affect all nonprofits.”

Howe cited a July 2024 study by researchers at Indiana University and the University of Notre Dame, which showed that charitable giving dropped by $20 billion in 2018. According to the study, the drop was caused by a provision in the Tax Cuts and Jobs Act (TJCA) — President Donald Trump’s signature tax cuts passed the previous year — that changed the standard deduction for individual income taxes.

“Basic theory and our empirical results suggest heterogeneous effects for taxpayers with different amounts of itemizable expenses,” the study reads.

Other nonprofit players, such as Henry Bogdan of Maryland Nonprofits, are lobbying for policy changes to incentivize middle-class donors to keep giving to charity.

“We’re just spending our time trying to encourage people to support what’s called the CHARITY Act in Congress, [which] would create a tax credit for all taxpayers for charitable contributions,” said Bogdan, the group’s policy director.

Bogdan agreed that most charity donors do not take advantage of itemized deductions, noting that the number of people who itemize deductions has drastically decreased since the TCJA’s passage in 2017. He says his organization is continuing to monitor Moore’s proposal throughout a busy legislative session.

“We’ve been asking for breakdowns on the numbers for … the increases in the standard deductions,” Bogdan said.

Currently, Maryland is one of four states — the others being Georgia, Oklahoma and Utah, plus the District of Columbia — to require that all itemized deductions match those indicated on a federal tax return. Thirty states and the District of Columbia allowed some form of itemized deductions as of 2020, according to a report from the nonpartisan Institute on Taxation and Economic Policy.

Christine Condon contributed to this report. Have a news tip? Contact Carson Swick at cswick@baltsun.com.