Charitable donations can reduce your taxable income and lower your tax bill - if done correctly. Here’s what you need to know:
To maximize tax savings, consider strategies like bunching donations, donating appreciated assets, or using digital tools to track contributions. Always verify the charity’s IRS-approved status before donating.
To claim a donation deduction, your contribution must meet IRS requirements and be made to an approved organization.
The IRS allows deductions for various types of charitable contributions, but you need to itemize your deductions on Schedule A (Form 1040) instead of taking the standard deduction. Here's a breakdown of what qualifies:
| Donation Type | Maximum Deduction (% of AGI) | Requirements |
|---|---|---|
| Cash to Public Charities | 60% | Receipt or bank record required |
| Private Foundations | 30% | Written acknowledgment needed |
| Veterans Organizations | 30% | Official documentation required |
| Property/Assets | 30% | May need a professional appraisal |
Keep in mind, you can't deduct the full amount if you receive something in return. For example, if you pay $200 for a dinner valued at $50, only $150 is deductible . Also, make sure the charity you donate to is IRS-approved.
Once you know what types of donations qualify, the next step is to confirm the charity's IRS-approved status.
"A charitable donation is a gift of money or goods to a tax-exempt organization that can reduce your taxable income. To claim a deduction for charitable donations on your taxes, you must have donated to an IRS-recognized charity and received nothing in return for your gift."
Eligible organizations generally include:
To verify an organization's tax-exempt status, use the IRS Exempt Organizations Select Check tool . This online resource provides up-to-date details on whether an organization can accept tax-deductible contributions.
Once you confirm you're eligible, here's how to claim your charitable deduction.
Start by comparing your itemized deductions to the standard deduction to see which option benefits you more. Gather essential documents like Form 1098, property tax records, state income documentation, and donation receipts. Platforms like Bono simplify this process by offering a single annual tax receipt for all your contributions.
The records you'll need depend on the size and type of your donation:
For donations of $250 or more, the acknowledgment must include the charity's name, the contribution amount (or a description of the donated property), whether you received any goods or services in return, and an estimate of their value .
Once your records are in order, you’ll need to account for deduction limits.
The IRS sets limits based on your AGI (Adjusted Gross Income) and the type of donation . Generally, you can deduct charitable contributions up to 50% of your AGI . If your contributions exceed this limit, you can carry the excess forward for up to five years.
The Tax Cuts and Jobs Act (TCJA) increased standard deductions. For the 2025 tax year, single filers can claim $15,000 (up from $14,600 in 2024), and married couples filing jointly can claim $30,000 (up from $29,200 in 2024). These higher deductions have significantly reduced the number of households itemizing deductions, dropping from 37 million to 16 million. Between 2018 and 2021, charitable contributions also fell by $252 billion as a result.
"Fewer Americans now have access to the charitable deduction than at any time in its history" - Charitable Giving Coalition
Data shows that households switching to the standard deduction gave, on average, $880 less in 2018. To make the most of your deductions, it's crucial to understand the rules around donation carryovers.
If your charitable contributions exceed your annual Adjusted Gross Income (AGI) limits, you can carry them forward for up to five years. Here's a quick breakdown:
| Contribution Type | Carryover Period | Key Details |
|---|---|---|
| Standard Charitable Contributions | 5 years | Limited by annual AGI caps |
| Qualified Conservation Contributions | 15 years | Longer carryover period |
| Multiple Year Carryovers | 5 years | Use earlier year carryovers first |
Consider these strategies to optimize your charitable deductions:
These approaches can help you make the most of your charitable contributions under current tax laws.
Before donating, make sure the organization is tax-exempt by using the IRS's "Tax Exempt Organization Search" tool . This tool allows you to check their current tax-exempt status, view Form 990 filings, see if their status has been revoked, and access determination letters. Since the IRS updates this database regularly, you can confirm eligibility right away .
Digital platforms make it easier to track donations and generate the tax documents you’ll need . For example, Bono offers several helpful features:
| Feature | Benefit |
|---|---|
| Consolidated Tax Receipt | One document for all your yearly donations |
| Real-time Impact Tracking | See the results of your contributions |
| Automated Documentation | Immediate access to tax verification |
| Vetted Charity Network | Access to pre-screened, legitimate charities |
Avoid informal payment methods like Venmo or Zelle, as they often don’t provide adequate tax documentation . Timing your donations strategically can also help you get the most out of tax benefits.
To maximize deductions, consider grouping your donations into a single tax year. This strategy lets you itemize deductions in one year while taking the standard deduction in the next. For instance, a married couple with $23,000 in annual itemized deductions, including $10,000 in charitable donations, could increase their total deduction from $56,900 to $62,200 over two years by bunching their donations . Aligning contributions with high-deduction years can make a noticeable difference .
Here’s a quick recap of the main points covered. Charitable giving not only supports important causes but also provides tax benefits when done strategically. Keep in mind that standard deduction thresholds apply , and having proper documentation is crucial for staying compliant with tax laws .
Digital tools can simplify the process by consolidating receipts and automating documentation, making tax filing easier .
Here are some effective tax-smart giving strategies:
| Giving Strategy | Tax Benefit | Best For |
|---|---|---|
| Appreciated Assets | Avoids capital gains tax + full market value deduction | Donors with stocks or property |
| IRA Charitable Rollover | Up to $105,000 tax-free distribution in 2025 | Donors age 70½+ |
| Bunching Donations | Can surpass the standard deduction threshold | All itemizing donors |
These methods highlight practical ways to maximize both your charitable impact and tax savings.
"Understanding the tax strategies related to charitable contributions can help you decide how much to give, what asset to give and when to give, so you can provide the maximum amount to charity - and receive the maximum tax advantages for yourself." - Fidelity Charitable
Charitable giving in the U.S. is massive, with individuals and families donating over $1 billion every single day . As mentioned earlier, always confirm that the charity has 501(c)(3) status and keep detailed records of your contributions. Cash donations to public charities are deductible up to 60% of your adjusted gross income, while non-cash assets are capped at 30% . With thoughtful planning, you can amplify both your generosity and your tax benefits.
