An Analysis of Potential Tax Incentives to Increase Charitable Giving in Puerto Rico

Research Report

An Analysis of Potential Tax Incentives to Increase Charitable Giving in Puerto Rico

Final Report

Abstract

Improved incentives for private charitable giving would strengthen nonprofit organizations in Puerto Rico. Puerto Rico's income tax allows itemizers to deduct charitable contributions, but with limits. Taxpayers may choose between a 100 percent deduction for contributions over 3 percent of adjusted gross income (AGI) or a 33 percent deduction for contributions with no floor. Deductions may not exceed 15 percent of AGI. Removing the 15 percent ceiling would be a relatively cost effective way of encouraging more giving. Reducing the 3 percent floor, though generating less additional giving per dollar of revenue loss, would encourage broader participation.

To reuse content from Urban Institute, visit copyright.com, search for the publications, choose from a list of licenses, and complete the transaction.