Tax Treatment of Political Contributions

Format for Printing

Format for printing

Request Reprints

Reuse/Reprint

By Roy Lewis

After the debacle that was the 2000 presidential election, this could be a moot point... but you know your mailbox will eventually be stuffed with solicitations asking (in some cases begging) you to contribute to a specific candidate or political party. It'll keep happening each election. You might ask yourself, "Would this political contribution be tax deductible?"

The short answer is a resounding no. You can't deduct any money that is paid either directly or indirectly to a political party or candidate. This is true whether you make the contribution personally or through your business.

Simply stated, you can't deduct, as a business expense or as an itemized deduction, any money paid for:

  1. Advertising in a political party's convention program, or in any other publication, if part of the publication's proceeds benefits a political party or candidate.

  2. A ticket to a dinner or program that is intended to benefit a political party or candidate.

  3. A ticket to any inaugural event -- including balls, galas, concerts, parades, etc. -- since such events are generally associated with the installation of elected political candidates.
If, for example, you buy a ticket to a fundraising dinner for a political candidate, you cannot deduct any part of the price of the ticket, even if the candidate donates the proceeds to charity. Similarly, you can't deduct the price of a ticket to an event -- even if it is held for a candidate who was unsuccessful in his bid for political office. For example, the price of a ticket to an event to retire a candidate's campaign debt is not deductible.

You should be aware that these rules apply not only to funds that you pay to the two national political parties but also to:
  1. Any national, state, or local committee of a political party; and

  2. Any committee, association, or organization whose purpose is to influence the election of any individual to public office.
This being the case, you can't deduct any contributions that you make to a political action committee (PAC) if the PAC spends money to influence the selection, nomination, or election of any individual to elected public office. Since most PACs undertake such influence in some way or another, it's likely that any payments you make to a PAC will be non-deductible contributions.

We all realize that money is the mother's milk of politics. And, we would certainly expect you to want to provide financial support to your favorite political party and candidate. That's all fine and good. Just don't expect Uncle Sammy to subsidize your contribution in the form of a tax deduction.
This forum and the information provided here should not be relied on as a substitute for independent research to original sources of authority. The Motley Fool does not render legal, accounting, tax, or other professional advice. If legal, tax, or other expert assistance is required, the services of a competent professional should be sought. In other words, if you get audited, don't blame us.