Your charity donation tax deduction guide

Like many people, you may have a desire to use your money in a way that can make a difference to your community or for the causes you care about. Developing a charitable giving strategy can help you achieve the meaningful impact you envision while taking advantage of tax benefits along the way.

To make the most of your tax deductions, it helps to review what type of deductions qualify, how much you can deduct and how to find the charitable giving strategy that aligns with your values and your financial goals. 

How do tax deductions work?

A tax deduction is a provision that reduces your taxable income, which generally lowers the amount of taxes you have to pay. You can claim deductions in two main ways:

• Standardized deduction: A single, fixed amount you can deduct from your income, regardless of expenses.
• Itemized deductions: If you have significant deductible expenses such as state and local taxes paid, mortgage interest and charitable donations, you can itemize your deductions by listing each qualifying expense on Schedule A of your tax return.

Are charity donations tax deductible?

Yes, most charitable donations are tax deductible. If you’ve donated to charities in a given year, you can most likely list them as itemized deductions on your taxes. However, there are a few IRS rules to follow to ensure you are claiming donations properly. It may be helpful to consult with a tax professional when developing your charitable giving strategy.

How do charity tax deductions work?

The IRS has certain requirements for claiming charitable donations on your taxes. Before you claim any charitable giving on your tax forms, make sure you complete the following steps:

• Donate to a qualified charity. The IRS has specific requirements for organizations to be considered tax-exempt. For example, gifts made to individuals are not considered eligible. Review this IRS list of types of qualified organizations.
• Consider any potential benefit received. If you receive any goods or services in exchange for your donation, there are limits to how much you can deduct. The IRS only allows you to deduct the amount that exceeds the fair market value of the benefit you received. This applies to benefits like admission to a charity banquet or tickets to a sporting event.
• Keep detailed records. You should keep receipts or documentation of your donations for at least three years. Most charities will provide a year-end giving statement that outlines what you donated throughout the tax year. The documentation should also make clear whether the organization you donated to provided any goods or services in exchange for your donation.
• Itemize your deductions. The IRS only allows people to deduct charitable donations if they are itemized using Schedule A of Form 1040.

How much can you donate to charity for taxes?

You can typically deduct charitable cash contributions up to 60% of your adjusted gross income (AGI) when donations are made to qualified public charities. This limit applies to your total donations for the year, regardless of how many organizations you support.

If your contributions exceed this threshold, you can carry over the excess to your tax returns for up to five years. Other limits may apply depending on different types of donations or organizations (for example, gifts of appreciated property or gifts to private foundations). Some examples of those exceptions are listed in the following section

2026 changes from the OBBBA for itemizers and high-income taxpayers

The One Big Beautiful Bill Act (OBBBA), signed into law in 2025, introduced new rules for taxpayers who itemize deductions and make charitable contributions as a part of their tax planning strategies. These new rules go into effect beginning in 2026.

• Minimum contribution threshold. For some taxpayers, a minimum contribution threshold may apply, meaning you may need to contribute at least 0.5% of your AGI before claiming a deduction for additional charitable contributions. For example, if your AGI is $1,000,000, the first $5,000 of your qualified charitable contributions may not be deductible.
• Reduced deduction value for top earners. Taxpayers in the highest income tax bracket (37%) may see their itemized charitable deductions reduced in value to 35% of their value. This means for every dollar you would normally deduct, you can only claim 35 cents.

These changes particularly impact high-income taxpayers who rely on charitable giving as part of their tax planning strategy. Because these rules can be complex and may depend on your income, the type of gift and the recipient organization, consider discussing with tax and financial professionals to understand how these rules may affect your specific situation.

Understanding your charitable tax deduction options

Some giving approaches are simple, while others are a bit more complex – and each comes with different tax implications. When deciding which type of donation to make, consider these options. 

Direct gifts of cash

Making direct cash gifts is straightforward and flexible. You can contribute by check, credit card, or even through payroll deduction with your employer. When you donate to qualified public charities, you may be able to deduct up to 60% of your AGI in a given year. However, donations to private foundations have a lower annual limit of 30% of your AGI.

Starting in 2026, the OBBBA creates a permanent "above-the-line" deduction that benefits all taxpayers, even those using the standard deduction. Single filers can deduct up to $1,000 for charitable contributions, while married couples filing jointly can deduct up to $2,000. (These rules can be nuanced, so confirm eligibility and documentation requirements with a tax professional.)

While this provision allows a limited deduction for non-itemizers, larger or ongoing charitable strategies may still benefit from itemizing. If you're planning consistent annual donations that exceed these above-the-line limits, consider a strategic approach called "bunching." This involves consolidating multiple years of donations into a single tax year, allowing you to itemize deductions and maximize the tax benefits. 

Gifting appreciated assets

If you hold publicly traded securities (stocks) or other types of assets that have appreciated in value, you may face a significant capital gains tax when you sell the asset. Because of this, some people choose to gift the appreciated asset to a qualified charity. This allows you to avoid paying the capital gains taxes you’d likely need to pay if you sold the asset for a profit.

For gifts of appreciated publicly traded securities, you can claim a tax deduction equal to the fair market value of the asset. The tax deduction cannot exceed 30% of your AGI for gifts to a public charity or 20% of your AGI for gifts to a private foundation.

Gifting other types of non-cash assets

Other assets that can be gifted include real estate, business interests, life insurance policies, and capital assets such as land, buildings, machinery and appreciated closely held securities that you’ve owned for at least one year.

If your gifts exceed the tax deduction limits in the year the gift is made, you can carry the unused portion of the deduction forward up to five years. You can claim the unused deductions to the extent they fall within your deduction limits for each of those years until the entire amount has been exhausted.

Charitable lead trust

This type of irrevocable trust is designed as a wealth planning technique to transfer assets to family with a discounted value, or to reduce taxes on the grantor’s estate after their death. The trust first pays income to a charity (based on a rate determined by the IRS) for a set number of years. When the term ends, the remaining value of the assets is directed to designated non-charitable beneficiaries.

Charitable remainder trust

A charitable remainder trust can support your favorite cause and provide financial benefits for you or your family at the same time. This type of irrevocable trust allows you to make a charitable gift but retain a taxable income stream (determined by the IRS) generated by those assets for a set number of years or for life.

When the term ends, remaining assets are passed on to the designated charities tax-free. A portion of the contribution to the trust is tax deductible.

Qualified charitable distribution (QCD)

When you are 70½ or over, you can donate up to $111,000 in 2026 (adjusted annually for inflation) from your traditional or Roth IRA directly to a qualified charitable organization. If you are subject to required minimum distribution (RMD) rules (applicable after you reach age 73), a direct transfer from your IRA allows you to avoid having to pay income tax on the RMD and gives the assets directly to the charity.

Private foundation

An individual or family can establish a non-profit entity that is designed to direct donations or gifts to other charitable organizations. The private foundation directors retain control over how donations are invested and when and how the grants are ultimately made.

There are limits on claiming tax deductions and at least 5% of the foundation’s assets must be distributed to qualifying charities each year. The foundation must comply with several administrative requirements, including filing an annual tax return.

Donor-advised fund

A less complex option than a private foundation is a donor-advised fund. You create a fund in partnership with an existing 501(c)(3) organization and then advise on the donations. When you start a donor-advised fund, you get a tax deduction for the year in which you make the gift. The assets can be distributed to charities over many years.

Tax deduction limits for different types of donations

Here’s a quick breakdown of common tax deduction limits for different types of charity donations. Other limits and special rules may apply based on the organization and the type of property donated.

Frequently asked questions

Is donating crypto a taxable event?

No, you won’t owe capital-gains or income tax on the appreciation when you transfer cryptocurrency directly to a qualified charitable organization or donor-advised fund. The IRS typically treats crypto donations similarly to gifts of appreciated securities, meaning you typically don’t recognize capital gains when donating directly to a qualified charity.

If you’ve held the coins for more than a year, you also get a charitable deduction equal to their fair-market value (subject to the usual percentage-of-income caps). The only catch is if the gift is worth more than $5,000, you must attach Form 8283, Noncash Charitable Contributions, and hire a qualified appraiser to document the value. If you skip that step, the IRS will deny the deduction, even though the donation itself isn’t taxable.

Are charity auctions tax deductible?

Yes, in some cases charity auctions are tax deductible. If you spend money on items at a charity auction, you may be able to claim them as deductions if you pay more than the fair market value of an item. In other words, the difference between what you bid and the fair market value of the item can typically be deducted on your taxes. 

Do church donations count as charity for taxes?

Yes, the IRS considers donations made to churches, mosques, synagogues and other places of worship as charitable donations. As long as your church operates solely for religious purposes and with a tax-exempt status, any contributions you’ve made can likely be deducted.

Can you get a tax deduction for clothes donated to charity?

Yes, you can deduct donated items like clothing from your taxes. If you’ve donated items in good or used condition, you can claim the fair market value of those items as a deduction on your return. Donation centers often have a list of estimated donation values by item; for example, here’s the Salvation Army donation value guide.

How do you donate a car to charity for tax deduction?

If you want to donate a used car, you can typically deduct the price for which the charity sells your car. However, if the charity plans to use the vehicle for its own operating purposes, you may actually be able to deduct the car’s fair market value. The organization should be able to provide you with written acknowledgement of how they intend to use the car to help you deduct your donation properly. 

What is deduction bunching?

Deduction bunching is a strategic tax planning method where you consolidate multiple years of charitable donations into a single tax year. This allows you to exceed the standard deduction threshold, itemize your deductions and maximize your tax benefits for that specific year.

What are tax-deductible expenses?

Tax-deductible expenses don’t end with charitable donations. The IRS has provided a list of potentially deductible expenses. These include:

• Business use of your home or car
• Money you put in an IRA or HSA
• Student loan interest
• Capital losses
• Home mortgage interest
• Losses from disasters or theft
• Medical and dental expenses over 7.5% of your AGI
• Opportunity zone investments

Tax planning is critical to your charitable giving strategy

Careful planning can help you maximize the tax benefit of your charitable giving. Consider working with your tax, legal and financial professionals to determine the best assets, timing, amounts and forms of the gifts you’d like to make. When you can align your financial plans to support a greater cause and claim tax deductions in the process, everyone can benefit.

Learn how U.S. Bank can help you and your family develop a charitable giving strategy.