What Is the Charitable Contribution Deduction?

The charitable contribution deduction allows taxpayers who itemize their deductions to reduce their taxable income by the amount of qualifying donations made to IRS-recognized tax-exempt organizations such as public charities, religious organizations, educational institutions, and nonprofit hospitals. Cash donations are deductible up to 60% of your adjusted gross income in most cases; donations of appreciated property like stock are generally deductible up to 30% of AGI. To claim the deduction, you need a bank record or written acknowledgment from the charity for donations of $250 or more. Donating appreciated stock to charity is often more tax-efficient than giving cash, because you avoid capital gains tax on the appreciation while still deducting the full market value. Because most people take the standard deduction, charitable giving only provides a tax benefit if your total itemized deductions exceed your standard deduction — which is why strategies like bunching donations into a single year or using a donor-advised fund can make charitable giving more tax-efficient.