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June 6, 2019
Question

I entered a $10,000 church donation/tithe but it only reduced my tax bill by 3,101. Why are church tithes not 100% deductible up to 50% of your MAGI?

  • June 6, 2019
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1 reply

Employee
June 6, 2019

Church tithes are 100% deductible, up to 50% of your MAGI, but there is a difference between a deduction and a tax credit.

A deduction reduces your taxable income, dollar for dollar, but it does not reduce your tax the same way.

For example, assume your taxable income was $100,000 and your tax rate was 30%. Your tax on $100,000 be $30,000 (30% X $100,000 = $30,000).

If you took a $10,000 deduction for tithing, you taxable income would go down to $90,000. At a 30% tax rate, your taxes would then be $27,000 (30% X $90,000 = $27,000). 

From this example you can see that a $10,000 church tithe would result in a $3,000 reduction in tax.

This article provides additional information on the subject:

https://ttlc.intuit.com/replies/4989933


June 6, 2019
Thanks! I understand the difference now. I appreciate the response.