Yes, there are limits on how much you can deduct for charitable contributions on your federal tax return. The cap is based on a percentage of your adjusted gross income (AGI), and the exact percentage depends on what you donate and what type of organization receives it. Cash gifts to public charities get the most generous limit at 60% of AGI, while other combinations of donation type and recipient can drop that ceiling to 50%, 30%, or even 20%.
You Must Itemize to Deduct
Before the percentage limits even come into play, there’s a threshold requirement: you can only deduct charitable contributions if you itemize deductions on Schedule A of your tax return. If you take the standard deduction, your charitable giving doesn’t reduce your taxable income at all. For many taxpayers, the standard deduction is high enough that itemizing doesn’t make sense unless their combined deductible expenses, including charitable gifts, mortgage interest, and state and local taxes, exceed that amount.
AGI Limits for Cash Donations
When you give cash (or pay by check, credit card, or electronic transfer) to a public charity, you can deduct up to 60% of your AGI. Public charities include most of the organizations people commonly donate to: churches, universities, hospitals, the Red Cross, United Way, and similar groups.
Cash contributions to private foundations, veterans organizations, fraternal societies, and cemetery organizations face a lower ceiling of 30% of AGI. Private foundations are typically funded by a single family or corporation rather than the general public, and the IRS treats donations to them less favorably.
AGI Limits for Donated Property
Donating appreciated property, like stocks or real estate you’ve held for more than a year, comes with different rules. These assets are classified as capital gain property, and you can generally deduct their full fair market value rather than just what you originally paid. But the AGI ceiling is lower than for cash.
When you donate capital gain property to a public charity, your deduction is limited to 30% of AGI. If the same type of property goes to a private foundation or is given “for the use of” any qualified organization (meaning the organization doesn’t receive it outright but benefits from it), the limit drops to 20% of AGI.
There’s an optional workaround for the 30% limit on appreciated property given to public charities. You can elect to use the 50% limit instead, but the tradeoff is significant: you must reduce the deductible value of the property to your cost basis rather than fair market value. In other words, you give up the benefit of deducting the appreciation. This election makes sense only in narrow situations where you’d rather deduct a larger portion of a smaller value.
When Fair Market Value Gets Reduced
In several specific situations, you can’t deduct the full fair market value of donated property even when going to a public charity. You must reduce the value by the amount that would have been long-term capital gain if you’d sold it. This applies when the donated property is intellectual property, certain taxidermy property, or tangible personal property the charity puts to a use unrelated to its exempt purpose. It also applies when donated property (other than qualified appreciated stock) goes to a private nonoperating foundation.
How the Limits Stack Up
If you make multiple types of donations in the same year, the limits interact. Here’s a quick reference:
- 60% of AGI: Cash to public charities
- 50% of AGI: Cash or ordinary-income property to public charities, private operating foundations, and certain pass-through private foundations (this is the broadest general category)
- 30% of AGI: Cash to private foundations, veterans groups, and fraternal societies. Also, capital gain property donated to public charities.
- 20% of AGI: Capital gain property donated to private foundations or given “for the use of” any qualified organization
Your total charitable deduction across all categories cannot exceed 60% of AGI in any single year. When contributions fall into multiple categories, the lower-limit donations reduce the room available under the higher limits, so the ordering matters when you’re close to the ceiling.
Carrying Forward Excess Donations
If your charitable contributions exceed the applicable AGI limit in a given year, the excess isn’t lost. You can carry forward the unused portion and deduct it over the next five tax years, subject to the same percentage limits in each future year. For example, if you have $200,000 in AGI and donate $150,000 in cash to a public charity, your deduction for the current year is capped at $120,000 (60% of AGI). The remaining $30,000 carries forward and can be deducted in the following year, again subject to that year’s 60% limit based on your AGI at that time.
Carryforward amounts are used after current-year contributions. So if you continue making large donations in subsequent years, the carried-forward amount may keep getting pushed out until it eventually expires after the five-year window closes.
Documentation Requirements
The IRS won’t allow your deduction without proper records, and the requirements scale with the size of the gift. For any cash donation, you need a bank record, receipt, or written communication from the charity showing the date, amount, and organization name. For single donations of $250 or more, you need a written acknowledgment from the charity before you file your return.
Noncash donations valued above $500 require you to file Form 8283 with your return. If a single item or group of similar items exceeds $5,000 in claimed value, you generally need a qualified appraisal. Publicly traded stock is an exception to the appraisal rule since its value is easy to verify through market prices.
Qualified Organizations Only
Not every organization that seems charitable qualifies for tax-deductible donations. The contribution must go to an organization recognized under Section 170(c) of the tax code. This includes nonprofits organized for religious, charitable, scientific, literary, or educational purposes, as well as certain government entities. Donations to individuals, political campaigns, and most foreign organizations do not qualify. The IRS maintains a searchable database called the Tax Exempt Organization Search tool where you can verify whether a specific organization is eligible to receive deductible contributions.