Expanded employee retention credit, charitable-giving provisions among tax measures enacted at end of 2020

Charitable-giving tax provisions

President Trump on December 27, 2020, signed into law the “Consolidated Appropriations Act, 2021”—legislation that includes over $900 billion for various coronavirus (COVID-19) relief programs, government funding of $1.4 trillion, and myriad tax provisions. Accordingly, the date of enactment is December 27, 2020.

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Provisions of the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) that increase incentives for charitable giving have been extended through 2021, including:

  • The increased deduction limitations for certain charitable contributions of cash—to up to 100% of adjusted gross income for itemizing individuals and up to 25% of taxable income for corporations
  • The increased deduction limitation applicable to certain donations of food inventory (namely, those that are eligible for an enhanced charitable deduction) and
  • The “above the line” charitable contribution deduction for non-itemizers

The enacted measures also:

  • Expand the non-itemizer deduction, originally having a cap of $300, now allowing a deduction of up to $600 for joint-return filers (while at the same time adding an enhanced penalty for understatements attributable to this deduction)
  • Permit corporations to deduct up to 100% of their taxable income for making certain “qualified disaster relief contributions” in 2020 or before February 25, 2021
  • Extend the employee retention credit (ERC) originally enacted in the CARES Act to July 1, 2021, and expand the credit by increasing the credit percentage from 50% to 70%, increasing the per employee limitation, and broadening the definition of eligible employers to, among things, include certain public universities and governmental hospitals
  • Authorize additional funding through the Higher Education Emergency Relief Fund, but with reduced allocations for educational institutions paying excise tax under section 4968 and restrictions on the use of the funds by such institutions

For a summary of the enacted legislation, read TaxNewsFlash

For a summary of the compensation and benefit provisions of the legislation, including the expanded ERC, read TaxNewsFlash

For a prior summary of the charitable giving provisions and other provisions relating to exempt organizations, read TaxNewsFlash


For more information, contact a tax professional with KPMG’s Washington National Tax practice:

Ruth Madrigal | +1 202 533 8817 | ruthmadrigal@kpmg.com

Preston Quesenberry | +1 202 533 3985 | pquesenberry@kpmg.com

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