The CARES Act and Charitable Contributions
May 7, 2020 - The CARES Act that President Trump signed into law on March 27, 2020, contained significant provisions related to charitable deductions, providing many individuals and corporate donors with greater flexibility.
New $300 Deduction for Qualified Charitable Donations
Individuals will be able to claim a $300 above-the-line deduction for cash contributions made to qualified charitable organizations in 2020. This deduction is available to taxpayers who claim the standard deduction, broadening the pool of individual taxpayers who can receive a tax benefit for charitable contributions.
60% of AGI Limit for Individuals Increased to 100% for 2020
Individuals who itemize can deduct cash contributions to qualified charitable organizations of up to 100% of their adjusted gross income (AGI) for the 2020 tax year—these deductions were previously limited to 60% of their AGI.
10% Taxable Income Limit for Corporations Increased to 25% for 2020
Corporations can deduct cash contributions to qualified charitable organizations of up to 25% of their taxable income for the 2020 tax year—these deductions were previously limited to 10% of the taxpayer’s taxable income.
These cash contributions must be made to public charities. You can verify the status of all nonprofit organizations using the IRS Tax Exempt Organization Search.
Cash contributions do not need to be specifically for COVID-19 related activities to fall under the guidelines outlined above. Contributions to new or existing donor-advised funds, or to private non-operating foundations do not qualify for either the above-the-line deduction or the 100% of AGI limitation.