In the UK, the donation amount is subtracted from gross salary to get to taxable income
That’s very interesting! A lot of people assume that this is how it works in the US, though it isn’t.
Do you have multiple kinds of taxes that you need to pay out of your paycheck? The US does (federal, state, local, social security, medicare, unemployment) and it’s only federal taxes (and a few states, with low limits) where you can deduct donations.
There are two kinds of taxes—income tax and national insurance—and donating to charity only reduces your income tax[1].
I talk a bit about donating through your payroll vs via Gift Aid with some examples in my post here.
To add to Raoul’s point, the government provides a benefit whether you donate via your payroll, or through your post-tax earnings, but donating via payroll:
Is easier for you, especially if you are a high earner, since you don’t have to apply for your tax rebate
Is easier for the charity, they don’t have to worry about Gift Aid
That’s very interesting! A lot of people assume that this is how it works in the US, though it isn’t.
Do you have multiple kinds of taxes that you need to pay out of your paycheck? The US does (federal, state, local, social security, medicare, unemployment) and it’s only federal taxes (and a few states, with low limits) where you can deduct donations.
There are two kinds of taxes—income tax and national insurance—and donating to charity only reduces your income tax[1].
I talk a bit about donating through your payroll vs via Gift Aid with some examples in my post here.
To add to Raoul’s point, the government provides a benefit whether you donate via your payroll, or through your post-tax earnings, but donating via payroll:
Is easier for you, especially if you are a high earner, since you don’t have to apply for your tax rebate
Is easier for the charity, they don’t have to worry about Gift Aid
If you have a student loan, this is also deducted from your paycheck, and also not affected by charitable donations