Tax Basics

political cash contribution

Are Donations to a Political Campaign Tax Deductible?

August 30, 2016 : Mike Slack - The Tax Institute

Editor’s Note: Do you plan to give to a political campaign in 2016? Tax laws regarding political contributions are complex, so we’ve brought in an expert to help explain whether political contributions are tax deductible.

With the 2016 political season in full swing, candidates from both sides of the aisle are starting to hit up donors for cash. After making a contribution, donors often ask whether they can deduct contributions to a candidate or political cause of choice on their personal or business tax return. The simple answer is no, donations to political candidates and campaigns are not deductible.

Confusion usually arises over the difference between political contributions and charitable contributions. Thus, there are two rules you need to keep in mind:

1) Typically, deductible charitable contributions are those made to organizations that are tax-exempt under §501(c)(3) of the Internal Revenue Code. This type of organization is specifically barred from attempting to influence legislation, or participating in any political campaign. Because of this, a political campaign or party will never fall under §501(c)(3). Therefore, political contributions cannot be treated as tax deductible charitable contributions.

2) It’s true that businesses often have an interest in the outcomes of elections,and it shows when looking at their financial involvement in the political landscape. However, the tax code is very specific —  stating in most cases no business expense deduction may be claimed for “any amount paid or incurred in connection with influencing legislation.”

This rule is so strict that it prevents political candidates from deducting their own out-of-pocket expenses incurred while running for office. Campaign expenses of an individual running for any political office or for re-election to any political office cannot be deducted. These expenses include registration fees, qualification fees and legal fees, and advertising.

So if you are looking for potential tax deductions, you may want to look elsewhere. Retirement, medical, and charitable contributions are a few opportunities to reduce your overall taxable income.

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Mike Slack - The Tax Institute

Mike Slack - The Tax Institute

The Tax Institute

Mike Slack, JD, EA, is a senior tax research analyst at The Tax Institute. Mike leads research teams focused on business and investment tax issues.

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