Charitable Donation Tax Deduction: How it Works

Are Charitable Donations Tax Deductible?

Charitable donations are tax-deductible as long as you follow IRS guidelines. For the 2025 tax year, that generally means you need to:

• Itemize on Schedule A rather than claim the standard deduction
• Pay attention to gift limits
• Verify the charity is a tax-exempt organization

The IRS allows you to deduct up to 60% of your adjusted gross income (AGI) via charitable donations, though in some cases you may be limited to 20%, 30% or 50%. The limits also depend on the type of donation and charity. If you exceed the cap in any year, you may carry forward the deduction for five years.

What Donations Are Tax Deductible?

Deductible charity donations generally fall into three main categories:

• Cash contributions: These include donations you make by check, cash or card.
• Fair market value of donated property: The value of the items you give—such as used household goods, stocks, real estate, art, vehicles and more—also count toward the deduction.
• Expenses from volunteer work: You can deduct qualified unreimbursed expenses when volunteering for a charity. For example, gasoline and hotel stays may be deductible when traveling to a volunteer event.

What Types of Charity Are Not Tax Deductible?

Some types of charity aren't typically tax deductible, such as:

• Donations to specific individuals
• Gifts to ineligible organizations
• Donations to political organizations and campaigns
• Value of volunteer time
• Gifts that are pledged but not actually given
• Money spent at fundraisers, unless you gift more than the face value of an item

New Charitable Donation Deduction Rules for 2026

The One Big Beautiful Bill Act (OBBBA) made several changes to charitable contribution tax deductions. The new rules take effect in the 2026 tax year, which applies to income tax returns filed in 2027.

For Taxpayers Who Take the Standard Deduction

Under the new tax law, you may deduct some of your charitable contributions even when you claim the standard deduction. The OBBBA creates a permanent above-the-line tax deduction for qualified donations of up to $1,000 (or $2,000 for joint filers).

The benefit only applies to cash gifts, so you won't be able to deduct the fair market value of any property donations if you take the standard deduction.

For Taxpayers Who Itemize Deductions

Starting in tax year 2026, itemizers may only deduct charitable contributions above a floor equal to 0.5% of AGI. For instance, say you have an AGI of $100,000 and $2,000 in charitable donations in 2026. The first $500 of the donation would not be deductible, but anything beyond that amount—$1,500 in this example—would be.

If you're in the highest income bracket, the new rule limits the value of itemized deductions to 35 cents per dollar, rather than the typical 37 cents. A single filer with an AGI of $800,000 and donations of $20,000 could deduct anything above the 0.5% floor, or $16,000. In the past, that deduction would be worth $5,920. It would now be worth $5,600 under the new law.

Other Changes

The legislation also creates a new, nonrefundable tax credit of up to $1,700 for cash donations to scholarship-granting organizations that fund K-12 education, beginning in 2027. While the credit can reduce your tax bill, it can't push it below zero.

Separately, the law also adds a 1% income floor for corporations claiming charitable contribution deductions. This rule limits how much of those donations can be written off.

How to Claim a Charitable Donation Deduction on Your Taxes

If you want to deduct charity donations on your tax return, here are the steps you'll need to take:

1. Make a donation. You may deduct the value of cash, property and expenses related to volunteer work in the year you made the gift—even if the money doesn't land in the organization's hands until the following year.
2. Verify the organization. Only donations made to qualifying tax-exempt organizations can be deducted. This IRS' search tool can help you check the organization's status.
3. Determine whether you'll itemize. In tax year 2025, your charitable gifts qualify for the deduction only if you itemize on Schedule A. (This changes in 2026, when you may deduct some donations even when claiming the standard deduction.)
4. Calculate your gifts. The value of your charitable contributions depends on what you donated. Add up the total cash you gave, calculate the fair market value of your donated items and add up the expenses you incurred while volunteering.
5. Save documents. You'll need the receipt from your donation and proof of how you paid for it. For instance, you can save a canceled check, a credit card statement showing the charge or a bank statement showing a debit.
6. Contact the organization if needed. If you contributed $250 or more, you'll need a statement from the charity acknowledging your gift, the date and amount of your donation, and confirmation that you did not receive any benefit in return.
7. Fill out Form 8283 if applicable. You'll need to complete Form 8283 if you plan to deduct at least $500 worth of noncash donations. The IRS also requires an appraisal of your items if they're worth more than $5,000 total.
8. Prepare your taxes. Use the information you gathered to report your charitable contributions, which are handled on lines 11 to 14 on Schedule A.

IRS Publication 561 can help guide you through the process and answer any of your questions.

How Much Do Charitable Donations Reduce Taxes?

The amount that your charitable donations lower your tax bill depends on a few factors. Each dollar you can claim for the charitable contribution tax break can lower your tax bill by roughly 20 cents to 37 cents, depending on your tax bracket. Higher-income taxpayers typically see the biggest benefit because deductions are more valuable at higher marginal rates.

Example: Let's say you're in the 24% federal tax bracket and you itemize deductions. If you donate $1,000 in cash to a qualifying charity, that donation reduces your taxable income by $1,000. As a result, your federal tax bill could drop by about $240 (24% of $1,000).

For the 2025 tax year, charitable giving may not affect your taxes at all if you take the standard deduction or donate smaller amounts. However, your gift can still make a meaningful impact for the causes you support.

Helpful Tips for Donating to Charity

Here are a few additional tips to keep in mind as you consider contributing to good causes:

• Review your volunteer-related expenses. Volunteer hours are not deductible, but you may be able to deduct expenses incurred while doing the work.
• Keep your donation records. You may need these if the IRS asks for proof that you qualify for the tax deduction.
• Charity "purchases" may be partially deductible. If you spend money at a fundraising event, you may be able to count some of it as a cash contribution. The price would need to exceed the fair market value for the product or service you received, and the extra money you paid would count as the donation.
• Check out a charity before you contribute. Scams abound, and you should always make sure any charity you donate to is legitimate. Charity Navigator and Charity Watch can provide more information about organizations you aren't familiar with.

Charity Deductions Provide an Incentive to Give

Getting a tax deduction may not be the most important reason to make charitable donations, but tax breaks are a great added incentive. A large donation can even make a significant dent in your tax bill. Following the necessary steps can ensure you qualify for an eligible deduction—and help others in the process.