Charitable Deduction
An itemized deduction for donations to qualified charitable organizations. Cash donations are generally deductible up to 60% of AGI; appreciated property donations up to 30%.
The charitable deduction allows you to reduce your taxable income by the amount you donate to qualified 501(c)(3) organizations when you itemize. Cash donations are generally deductible up to 60% of your AGI, while donations of appreciated property (like stocks) are limited to 30% of AGI. Excess donations can be carried forward for up to five years.
To claim the deduction, you need documentation. For cash donations of $250 or more, you need a written acknowledgment from the charity. For non-cash donations over $500, you must file Form 8283. Donations of property over $5,000 generally require a qualified appraisal.
Strategic charitable giving can enhance your tax benefits. Donating appreciated stock avoids capital gains tax while giving you a deduction for the full market value. Donor-advised funds let you bunch multiple years of giving into one year to exceed the standard deduction threshold, then distribute the funds to charities over time.
Related Terms
Itemized Deduction
Specific expenses you can deduct instead of taking the standard deduction, including mortgage interest, state/local taxes (up to $10,000), charitable donations, and medical expenses.
Adjusted Gross Income (AGI)
Your gross income minus specific adjustments such as student loan interest, IRA contributions, and self-employment tax. AGI is the starting point for calculating your taxable income.
Standard Deduction
A fixed dollar amount that reduces your taxable income, available to all filers who do not itemize. For 2025, it is $15,000 for single filers and $30,000 for married filing jointly.
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