All Giving

From Tax Deductions To Discipleship - Part 1

4 min read

Editor’s Note: This is part 1 of a special 2 part series.

Over the last decade, the way Americans give to their local churches has quietly but profoundly changed. The change did not begin in the pulpit, the offering plate, or even the heart of the giver. It began in Washington, D.C., with federal tax legislation—specifically the Tax Cuts and Jobs Act of 2017 (TCJA) and, more recently, the One Big Beautiful Act Bill of 2025.

For church leaders, understanding these laws is not about politics or tax compliance. It is about shepherding people faithfully in a new environment where financial incentives for charitable giving have been significantly reduced and, in some cases, subtly reframed in ways that unintentionally undermine generosity as a spiritual discipline.

The result is a sobering reality: many people in our congregations no longer experience meaningful tax benefits from giving. And for those whose generosity was partially—or primarily—motivated by tax considerations, giving has become easier to delay, reduce, or abandon altogether.

This moment calls for clarity, honesty, and renewed intentionality. If giving is no longer reinforced by the tax code, it must be reinforced by discipleship.

What Changed in 2017: The New Standard Deduction

Before 2018, most middle-income households itemized deductions on their federal tax returns. Mortgage interest, state and local taxes, medical expenses, and charitable contributions often combined to exceed the standard deduction. For churchgoers, this meant that every dollar given to the church could reduce taxable income. While few would say they gave only for the tax benefit, the deduction reinforced the habit and softened the perceived cost of generosity.

The Tax Cuts and Jobs Act of 2017 dramatically altered this landscape.

The law nearly doubled the standard deduction:

For single filers, it rose from roughly $6,500 to $12,000

For married couples filing jointly, it increased from about $13,000 to $24,000

At the same time, several itemized deductions were limited or eliminated, most notably the cap on state and local tax deductions. The combined effect was decisive: itemizing no longer made sense for most taxpayers.

Within two years of the law’s enactment, the percentage of taxpayers who itemized fell from approximately 34% to less than 10%. In practical terms, this meant that roughly nine out of ten households—including faithful church members—received no tax benefit whatsoever from charitable giving.

The 2025 Law: A Partial Fix That Misses the Heart

The One Big Beautiful Act Bill of 2025 sought to respond to growing concern that charitable giving had declined following the TCJA. Its most notable provision affecting individual donors was the creation of an above-the-line charitable deduction for non-itemizers, capped at $2,000 per taxpayer.

At first glance, this appears to be good news. Non-itemizers—who make up the overwhelming majority of taxpayers—can now deduct some charitable gifts without itemizing. However, for church leaders, the pastoral implications are more complicated.

While well-intentioned, this provision actually reinforces several problematic dynamics:

It re-centers giving around tax optimization rather than spiritual formation
It frames generosity as a limited transaction rather than a lifelong discipline
It signals that giving beyond $2,000 carries no additional “value” in the eyes of the tax system
It unintentionally establishes a psychological “ceiling” rather than encouraging generosity

For many givers, the question subtly shifts from “What is God calling me to give?” to “Have I hit my deductible limit?”

In other words, rather than restoring generosity, the above-the-line deduction risks further demotivating sacrificial giving—especially among those whose giving is not rooted in spiritual maturity.

Why This Matters for Churches

For decades, charitable giving in America functioned within a hybrid framework. Giving was spiritual, relational, and missional—but it was also subsidized by the tax code. The federal government effectively partnered with nonprofits, including churches, by reducing the after-tax cost of generosity.

That partnership has now been substantially redefined.

Under current law:

Most givers receive no tax benefit at all, or
They receive a modest, capped benefit that does not scale with generosity

This creates a structural reality where:

Large gifts feel more costly than ever
Faithful tithing receives no additional encouragement
Planned generosity is replaced by threshold-based thinking

For spiritually mature believers, this shift may have little impact. Those who understand giving as worship, obedience, stewardship, and discipleship will continue to give regardless of tax incentives.

But for many others—especially newer believers or those whose faith has not yet deeply shaped their relationship with money—the change has been destabilizing.

Points to Ponder for Church Leaders

For many years, the tax code quietly reinforced generosity. How much of our giving culture depended on that reinforcement without us realizing it?
Have we assumed that declining generosity is primarily an economic problem, when it may actually be a formational one?
The tax changes did not change people’s hearts—but they may have revealed what was already shaping them. What does that reveal about our teaching?
If the majority of our givers receive no tax benefit at all, are we still communicating about giving as if they do?
Are we unintentionally measuring generosity in dollars raised rather than disciples formed?

Questions to Ask as Leaders

How well do we actually understand the current tax environment our members are living in?
Do we talk about giving differently with spiritually mature believers than with newer or less-formed ones?
If tax incentives disappeared entirely tomorrow, would our theology of giving still make sense to our congregation?
Are there groups in our church (young families, retirees, new believers) who may feel especially destabilized by these changes?
What assumptions about motivation are built into the way we currently teach and communicate about giving?

About the Author

Jim Sheppard is the Chairman and Principal of Generis, a consulting firm that helps churches, Christian schools, and faith-based organizations accelerate generosity toward their God-inspired vision.

With more than 30 years of experience guiding leaders and congregations, Jim is a trusted voice in stewardship, generosity, and organizational health.

This blog post originally appeared on Church Leader Insider. For more information or to subscribe to Church Leader Insider, click HERE.