New Charitable Giving Deduction Opportunities for 2020 Created by the CARES Act

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed and included incentives for charitable donations available for 2020 only.

Charitable Contribution Deduction for Taxpayers who claim the Standard Deduction: For 2020 only, taxpayers who do not itemize their deductions (i.e. claim the standard deduction) may claim a charitable contribution deduction of up to $300 for cash contributions made to a charity. It is an “above the line” adjustment to income that will reduce a donor’s adjusted gross income (AGI) and thereby reduce taxable income. It is important to note that a donation to a donor advised fund does not qualify for the new deduction.

Modification of Charitable Deduction Limit: As part of the bill, individuals and corporations that itemize can deduct much greater amounts of their contributions. Individuals can elect to deduct cash donations up to 100% of their 2020 AGI (up from 60% previously). The limit for non-cash contributions remains at 30% of AGI. Corporations may deduct up to 25% of their net taxable income for 2020 (up from the normal 10%). The higher deduction limit does not apply to donations directed to a donor advised fund.

Please consult your tax advisor for specific tax advice regarding the CARES act provisions.