State Income Tax deductions for Charitable Gifts

On Tue, 17 Apr 2001, Jonathan Gruber wrote:
> Inna, Dan -
> I am trying to track down data for the most recent several years on which
> states allow a charitable deduction from state income taxes.  The ACIR
> publication which used to track this apparently went out of business in
> 1995.  So I guess that my next best bet is to actually have my RA look
> through the tax documentation that you have at NBER.  Two questions for 
> you both:
> 1) Is there a shorter route?  Is there some quick subroutine you could run
> through TAXSIM to figure this out?  Or did you keep track of this 
> somewhere as you made the code?  Or did you not code up state-level 
> charitable deductions?


TAXSIM certainly takes account of charitable deductions, and limits cash and asset gifts according to taxpayer AGI and the separate limitations of the federal law. Most states that allow the federal itemized personal deduction follow the same rules for charitable deductions as the federal return, but where states do not allow any itemized deductions or treat contributions differently we do pick that up. The one thing we don't get are a few laws make contributions to particular in-state charities deductible. TAXSIM is not table driven, so making definitive a list of states in each category would require examing all the code.

However, we can write a program to run though TAXSIM, gathering the tax liability for a sample taxpayer for each state and year. The taxpayer is a single person without children but with $10,000 of mortgage interest and $50,000 of wage income. Then we add $1,000 of cash contributions to itemized personal deductions. If state income taxes go down by $5 or more, we can call that a state with a charitable deduction. Will that do?

Alabama (before 1982), Arizona (before 1982), Delaware (before 1987) and, the Carolinas (North Carolina until 1989) have ceilings, (usually 15 or 20% of AGI) above which gifts are not deductible. Wisconsin shifts to a 5% credit in 1987. Inna is going to investigate all these carefully and we will post details here when we are able.

Here is a link to the resulting ASCII file. The file format is intended for a statistical package, not publication. The 4 variables are:

  1. Numeric State ID from SOI (1-51).
  2. Tax year (1977-2015).
  3. Charitable deduction indicator (1 for deduction, 0 for none, -1 for no tax due).
  4. State postal abbreviation.

The file was revised and extended to 2015 in August 2016. There are 1887 (=51 states times 37 years) records in the file.

Last modified 25 August 2016 by drf