Many donors ask our service team the same question: Are political contributions tax deductible?
The short answer is no, they are not.
The longer answer is: it depends on what type of organization you have given to.
According to the IRS: “Political parties; campaign committees for candidates for federal, state or local office; and political action committees are all political organizations subject to tax under IRC section 527.”
Political organizations have an employer identification number (EIN) even if they do not have any employees. They file Form SS-4 to receive that EIN number and file periodic reports with a campaign finance or ethics board.
If the candidate or committee is focused on federal race(s), then they will file with the FEC.
State level candidates or committees will file with the state board of elections or ethics.
Local level candidates or committees file with either the state as well, or they file with a local board of elections depending on the rules of the jurisdiction.
How much can I give to a political organization?
Another common question we get is “How much can I give to a political organization?” That also depends on the type of account and jurisdiction.
Most contributions to candidates and committees need to be reported and there’s a limit on how much can be contributed. For example, the FEC contribution limits are outlined by this table.
While federal limits are consistent across the country, some state and local governments have smaller contribution limits or no limits at all.
The different tax statuses
Another situation you may run into is when you consider giving to advocacy organizations. Many advocacy organizations have multiple tax entities.
They’re often named by their tax status as 501(c)(3), 501(c)(4), and 527 organizations.
A 501(c)(3) entity is your traditional nonprofit organization where donations to the organization are tax deductible.
501(c)(3)s cannot engage in advocacy, but they can engage in education and awareness. 501(c)(3)s cannot suggest someone to support or oppose an issue specifically.
A 501(c)(4) entity is a nonprofit organization that’s used for the purpose of “social welfare.” These organizations do not have contribution limits and donors do not need to be disclosed publicly.
Donations to this entity are not tax deductible though. Generally donations to these entities are used for advocacy, but not direct electoral purposes where you’re asking someone to support or oppose an issue.
A 527 entity is a political organization. Some political organizations are considered independent expenditure organizations.
This type of organization has been nicknamed a “Super PAC” as they may raise unlimited sums of money from corporations, unions, associations and individuals, then spend unlimited sums to overtly advocate for or against political candidates. These organizations must disclose their donors, just like candidates and other political organizations.
Many times an advocacy organization will have one of each, so it’s important to understand which tax entity you’re donating to in order to know if your contribution will be disclosed and if it’s tax deductible.
It can be overwhelming, but…
The political donation laws are fairly overwhelming, especially if you’re simply wanting to support a candidate or issue that you deeply care about. With so many different federal, state, and local election laws it can get confusing quickly.
If you are ever uncertain about an issue and would like more information, please contact an attorney!