Nonprofit leaders say a provision in the House income tax reform plan could discourage Vermonters from making large charitable donations.
Under H.911, the tax bill passed by the House last month, Vermonters would no longer be able to deduct charitable contributions.
To replace the deduction, the bill created a 5 percent tax credit, for charitable gifts up to $10,000.
Many nonprofits say capping the tax credit could eliminate the incentive for donors to give organizations gifts above the $10,000 limit.
In a letter to the legislature and Gov. Phil Scott, leaders from 32 Vermont nonprofits urged lawmakers to scrap the capped credit and either keep the charitable deduction, or add a credit on top of the deduction.
In their letter, the nonprofits say the capped credit is of particular concern because “many charities receive 80 percent of their dollars from 20 percent of their donors.”
“H.911 communicates a message to donors that Vermont does not encourage or welcome large, transformational gifts,” the letter says. “We urge you to reconsider this proposal and create a new model that further incentivizes public-private partnerships.”