In the midst of the coronavirus pandemic, Congress passed the ambitious Coronavirus Aid, Relief, and Economic Security Act to shore up the American economy and soften the blow of stay-at-home orders in various states. One important but little-noted provision of the statute was section 2204 — which provided a $300 above-the-line deduction for donations made to charitable organizations in 2020. But while section 2204 offers a deduction at the federal level, state governments have been faced with the difficult decision of whether to incorporate similar provisions in their state tax codes. This debate has confronted state governments with two choices: most immediately, whether to incorporate section 2204 in their state tax systems for 2020; and more broadly, whether and how to subsidize charitable giving through state tax law thereafter.

Eighteen states and the District of Columbia practice rolling conformity — their tax provisions automatically revise in accordance with changes made to the Internal Revenue Code. Conformity potentially makes tax compliance more straightforward for individuals, as it spares them the hassle of calculating their income according to two separate legal regimes (federal and state). But while conformity may have its administrative benefits, it also has downfalls. For example, rolling conformity may undermine political accountability by causing voter confusion about which representatives are responsible for which tax policies. And it potentially limits local regulatory experimentation — a distinct benefit of federalism. There are good reasons why a state might want to modify or decouple from the federal tax code. For example, the state may want to raise additional revenues or may have concerns about the local effects of conformity. Federal tax law is often made with a general viewpoint that may overlook local conditions.

In an earlier piece, classmates Rebecca Roman and Sasha Timakova argued that rolling conformity states should decouple from the deferral-of-loss limitations in section 461(1). But decoupling from some aspects of the federal tax code should not necessitate decoupling from the entire federal tax code. In this piece, we argue that rolling conformity states should continue to conform to the federal tax code as it pertains to charitable deduction rules. We use Illinois — the state where we attend law school — as the focus of our analysis, though our arguments apply generally to other rolling conformity states as well.

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