Utahns are a generous people. The state is frequently ranked as one of the most philanthropic states in the union, as measured by both volunteer hours and charitable donations.

Given Utahns’ propensity to donate to charity, a recent change to the tax code must be welcome news. The One Big Beautiful Bill Act, signed in July 2025, introduces a new charitable giving tax deduction for taxpayers who take the standard deduction of up to $1,000 for individuals and $2,000 for married couples.

This change to the tax code is a significant milestone for charitable giving in the United States. Previously, only itemizing taxpayers (a small portion of the taxpayer population) could use charitable donations to partially offset taxable income. The new tax incentive holds much promise for making charitable giving more accessible to a broader set of Americans.

But for this to actually work, the government can’t let this tax break get buried in the giant One Big Beautiful Bill. They have to tell people about it. If taxpayers don’t know it’s there, they won’t use it. My research shows that how we talk about these rules is just as important as the rules themselves.

In the coming years, think tanks and policymakers alike will be rushing to answer how well this tax incentive works in practice. Economists think about the tax incentive as a trade-off. In general, we could fund non-profits in two ways: directly, through donations by individual donors, or indirectly, through transfers of government funds raised through taxes. If donations generated by the tax incentive exceed the foregone tax revenue, the policy will be considered a success.

My own research suggests that evaluating this policy is a bit more complicated. In a paper with my coauthors, we find that the cognitive burden of understanding the tax code not only changes donations but does so in a systematic way that affects the policy’s effectiveness.

My coauthors and I conducted an email campaign as part of a field experiment here at the University of Utah to observe how reducing the cognitive burden regarding tax incentives affects donation behavior. We randomly assigned prospective donors to one of three treatment groups where each group received information in the body of the email that would help them to understand the tax incentive, but some groups received more information than others. For honesty and transparency, we provided a link to IRS documentation about the tax incentive. For completeness, we also assigned some prospective donors to a control group where we don’t mention the tax incentive at all.

The results were striking. Donors who received any information (no matter the type) about the tax incentive were more likely to donate than donors who received no information. However, fully eliminating the cognitive burden of evaluating the tax savings (i.e., when we calculated the dollar amount of the donor’s savings) did not result in the highest donation amounts. Instead, prospective donors who received only a modest amount of information about the tax incentive donated the most.

To understand the broader implications for national policy, we also conducted a survey experiment on a broad sample of Americans, asking them to consider a hypothetical tax incentive similar to that in the One Big Beautiful Bill Act. We found that the level of information provided directly dictates whether a hypothetical tax break is a “win” for the public. For some prospective donors, we computed the exact dollar savings they could expect. For these people, every 1% decrease in the “price” of giving (due to the tax savings), the dollar amount of donations increased by 1%. That is, they gave just enough to make the policy break even.

However, when we gave less information — providing the rules without performing the final calculations for the prospective donors — the policy became highly efficient. For every 1% decrease in the “price” of giving, the dollar amount of donations increased by 2.27%.

Cognitive burdens were long thought to distort tax incentives, but now we know that not all cognitive burdens are equal. Before we declare this tax incentive a success or failure, we must consider the extent to which the cognitive load distorted charitable giving.

Only future data will tell us how effective the charitable contribution deduction is. But if we find that the increase in donations does not offset the loss of tax revenue, perhaps the lesson is that tax policy should be designed with the cognitive load in mind.

Sara Malik is an assistant professor in the David Eccles School of Business’s School of Accounting.

The Salt Lake Tribune is committed to creating a space where Utahns can share ideas, perspectives and solutions that move our state forward. We rely on your insight to do this. Find out how to share your opinion here, and email us at voices@sltrib.com.