Maximize Your Charitable Giving Tax Deduction in 2025
Published Date: June 20, 2025
Published By: Jac Cantos, Upcloud Accounting
Charitable giving is rewarding, and the tax benefits can make it even more impactful. Upcloud Accounting helps you understand how to maximize your deductions for tax year 2025.
Key Considerations for Charitable Deductions
Itemizing: You must itemize deductions on Schedule A (Form 1040) to claim charitable contributions.
AGI Limits: Deductions are generally capped at 60% of your Adjusted Gross Income (AGI), but this can vary depending on the type of donation and recipient organization.
Record Keeping: Always obtain a donation receipt from the charity.
What Qualifies as a Charitable Donation?
Donations to qualified 501(c)(3) organizations are generally deductible.
These include:
Religious organizations
Educational institutions
Charities (e.g., Goodwill, Salvation Army)
Hospitals and medical research organizations
Other IRS-recognized nonprofits
You can verify a charity's tax-exempt status using the IRS's Tax Exempt Organization Search tool.
Deduction Limits: Cash vs. Non-Cash Contributions
Cash Contributions: Generally, you can deduct the full amount of cash donations. However, if you receive something in return (e.g., a raffle ticket), you must reduce your deduction by the value of the benefit received.
Non-Cash Contributions (Property): Deductions are generally limited to 50% of your AGI. The fair market value of the donated property is used for the deduction. Appraisals may be required for items valued over $500. Form 8283 is needed for donations exceeding $500.
Deductible Volunteer Expenses
You can deduct unreimbursed expenses incurred while volunteering for a qualified charity (e.g., mileage using the IRS standard rate, supplies). However, your time spent volunteering is not deductible.
Important Changes Coming in 2026 (One Big Beautiful Bill)
The One Big Beautiful Bill (OBBB), signed into law in 2025, introduces significant changes to charitable contribution deductions starting in 2026:
Above-the-Line Deduction for Non-Itemizers: A deduction of up to $1,000 (single) or $2,000 (married filing jointly) will be allowed even if you don't itemize. This amount is not indexed for inflation.
New Floor for Itemized Deductions: For itemizers, only contributions exceeding 0.5% of your AGI will be deductible.
Navigating charitable contribution deductions can be complex. Upcloud Accounting helps you maximize your deductions while ensuring compliance with IRS regulations. Contact us today for expert guidance!
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Disclaimer: This article or blog is only for general knowledge and guidance and is not a substitute for an expert opinion. For technical advice, please consult your tax / legal advisor for your specific business concerns. For comments, suggestions, and feedback, feel free to email us at [email protected].
