How Much Can You Write Off in Charitable Donations?

The amount an individual can write off for charitable donations is governed by Internal Revenue Service (IRS) regulations. To be eligible for a deduction, a contribution must be made to a qualified charitable organization, such as a 501(c)(3) organization. The deduction is not unlimited; the IRS establishes caps based on a percentage of the taxpayer’s income. These rules determine the tax benefit a donor receives.

The Prerequisite of Itemizing Deductions

A taxpayer’s ability to deduct charitable contributions hinges on the decision to itemize deductions on their tax return. Taxpayers choose between taking the standard deduction or itemizing specific expenses, such as charitable gifts, on Schedule A of Form 1040. One should choose the option that results in a greater reduction of their taxable income.

The standard deduction is a fixed dollar amount that varies based on filing status. For the 2025 tax year, the standard deduction is $15,000 for single filers, $30,000 for those married filing jointly, and $22,500 for heads of household. A taxpayer should only elect to itemize if their total eligible expenses exceed their applicable standard deduction amount.

This creates a threshold for a donation to provide a direct tax benefit. For example, if a married couple has $29,000 in other itemized deductions, a $2,000 charitable donation would push their total to $31,000. In this case, itemizing becomes advantageous as it exceeds their $30,000 standard deduction.

Adjusted Gross Income (AGI) Limits on Donations

The value of a charitable deduction is further constrained by a percentage of the taxpayer’s Adjusted Gross Income (AGI). AGI is a measure of income calculated from your gross income minus specific above-the-line deductions. The specific percentage limit applied to a donation depends on the type of property given and the nature of the recipient organization.

For contributions of cash to most public charities, such as churches, educational institutions, and hospitals, the deduction is limited to 60% of the taxpayer’s AGI. The remaining amount is not lost but may be carried forward to future tax years.

For non-cash contributions like stocks or real estate, the deduction is based on the property’s Fair Market Value (FMV), the price it would sell for on the open market. For long-term capital gain property, an asset held for more than one year, the deduction is limited to 30% of AGI when given to a public charity. For example, if a taxpayer with a $100,000 AGI donates stock held for five years valued at $40,000, their deduction is capped at $30,000 for that year.

Stricter AGI limits apply to contributions to certain other qualified organizations, like private foundations, veterans’ organizations, and fraternal societies. For these groups, cash contributions are limited to 30% of AGI, and long-term capital gain property donations are limited to 20% of AGI.

Documentation and Record-Keeping Requirements

Proper substantiation is required for deducting any charitable contribution, with documentation needs varying by the donation’s amount and type. For any single cash contribution under $250, a taxpayer must retain a reliable record like a canceled check or bank statement. The record must include the charity’s name, and the date and amount of the contribution.

When a single contribution is $250 or more, the taxpayer must obtain a contemporaneous written acknowledgment from the charitable organization. This formal receipt must state the amount of cash contributed or describe any non-cash property. It must also state whether the organization provided any goods or services in exchange for the gift, and if so, provide a good-faith estimate of their value, which the donor must subtract from the deduction.

For non-cash donations over $500, taxpayers must file Form 8283 with their tax return. If the value of an item or group of similar items exceeds $5,000, the taxpayer must also obtain a qualified appraisal. The appraiser and a charity official must then sign Form 8283.

Handling Excess Contributions

When a taxpayer’s donations exceed their AGI percentage limit, the unused portion is not lost. The tax code allows the taxpayer to carry over the excess contribution and apply it to tax returns for up to five subsequent years.

The carryover deduction is subject to the original AGI limits in the years it is applied. In any given year, the carried-over amount, combined with any new donations, is again subject to the AGI limit for that year. The taxpayer must use the current year’s contributions first before applying any carryover amounts.

Consider a taxpayer with an AGI of $100,000 who donates $70,000 in cash to a public charity. Their deduction is limited to $60,000 (60% of AGI), leaving a $10,000 excess contribution. This $10,000 is carried over to the next year. If their AGI remains $100,000 in the following year and they make a new cash donation of $55,000, they can deduct that full $55,000 plus $5,000 of the carryover amount, reaching their $60,000 limit for that year. The remaining $5,000 of the carryover can then be moved to the third year.