How the TCJA Affects Your Charitable Contributions

The Tax Cuts and Jobs Act of 2017 (TCJA) introduced substantial changes to the U.S. tax code, altering how charitable contributions are treated for tax purposes. These modifications affect who can claim a deduction and the strategies available for tax-efficient philanthropy.

The Increased Standard Deduction and Itemizing

To receive a tax deduction for a charitable contribution, a taxpayer must itemize deductions on their federal tax return. This involves listing specific deductible expenses, such as mortgage interest, state and local taxes, and certain medical expenses, on Schedule A of Form 1040. If the total of these itemized deductions is greater than the standard deduction amount, the taxpayer benefits from itemizing.

The TCJA altered this calculation by nearly doubling the standard deduction, which made the threshold for itemizing much higher. For many taxpayers, the new standard deduction amount exceeded their total itemized deductions, removing the financial incentive to itemize. Compounding this, the TCJA also placed a $10,000 cap on the amount of state and local taxes (SALT) that a household can deduct annually.

This cap particularly limited a major deduction for taxpayers in areas with high property or income taxes. The combination of the higher standard deduction and the SALT cap means far fewer taxpayers now benefit from itemizing. As a result, they cannot deduct their charitable gifts.

Because of this shift, charitable giving no longer provides a federal tax benefit for those who take the standard deduction. The number of households claiming the charitable deduction fell sharply after the TCJA’s passage, fundamentally changing the financial equation for many donors. These TCJA provisions are temporary and scheduled to expire after 2025. If Congress does not act, the standard deduction will revert to its lower, pre-TCJA level, and the SALT cap will be eliminated, which would again change the financial calculations for donors.

Adjusted Gross Income Limitation for Cash Contributions

For taxpayers who continue to itemize, the TCJA benefits those who make substantial cash donations. The law raised the deduction limit for cash contributions to qualifying public charities from 50% to 60% of a taxpayer’s Adjusted Gross Income (AGI) for a single tax year. This change allows philanthropists who make large gifts to receive a greater tax benefit in the year of the donation.

This provision is temporary and scheduled to expire after 2025, at which point the limit will revert to 50% unless Congress acts.

If a taxpayer’s donations are more than the 60% AGI ceiling, the excess amount is not lost. Instead, the donor can carry over the unused deduction for up to five subsequent tax years. This carryover provision ensures the tax benefit of large donations can be utilized over time.

Substantiation Rules for Noncash Donations

The TCJA did not change the long-standing rules for documenting noncash gifts. The Internal Revenue Service (IRS) requires specific records based on the value of the donated items, and failure to comply can result in the disallowance of the deduction.

• Donations valued at less than $250 require the taxpayer to retain a receipt from the charity.
• Donations valued between $250 and $500 require the donor to obtain a contemporaneous written acknowledgment from the organization.
• Donations valued over $500 require the taxpayer to file Form 8283, Noncash Charitable Contributions, with their tax return.
• Donations valued at more than $5,000 also require the donor to obtain a qualified written appraisal of the property.

Tax-Efficient Giving Strategies

The higher standard deduction has prompted donors to seek tax-efficient giving strategies if they no longer benefit from itemizing. One method is “contribution bunching,” which involves consolidating several years of planned donations into a single tax year. This can raise a taxpayer’s itemized deductions high enough to exceed the standard deduction threshold for that year.

For example, a couple who donates $10,000 annually and has $10,000 in SALT deductions might not itemize. If they “bunch” three years of donations by contributing $30,000 in one year, their total itemized deductions would be $40,000. This amount would likely surpass the standard deduction, allowing a tax benefit for their giving in that year while they take the standard deduction in the others.

Another strategy is available to individuals age 70½ or older with a traditional Individual Retirement Account (IRA). They can make a Qualified Charitable Distribution (QCD), which is a direct transfer of up to $108,000 for 2025 from an IRA to a charity. The distributed amount is excluded from the taxpayer’s AGI, providing a tax benefit without the need to itemize deductions.

While the minimum age to make a QCD is 70½, these distributions can also count toward a taxpayer’s annual Required Minimum Distribution (RMD), which begins at age 73.