Not all charitable giving is created equal. As you consider year-end charitable gifts, it's important to understand how different donations are treated for tax purposes. Recent changes under the One Big Beautiful Bill Act (OBBBA) make charitable giving planning more important than ever. Beginning in 2026, taxpayers who itemize may generally deduct charitable contributions only to the extent they exceed 0.5% of adjusted gross income (AGI). For example, if your AGI is $100,000, your first $500 of charitable donations for the year won’t be deductible.

Understanding the tax rules for different types of donations can help you maximize your tax benefit and avoid surprises at filing time.

Cash Gifts

If you don’t itemize, you can claim the new charitable deduction of up to $1,000 ($2,000 for married couples filing jointly) for cash or cash-equivalent contributions to a qualified charitable organization. Only cash donations qualify.

If you do itemize deductions, you can generally deduct the full amount of cash contributions once you’ve surpassed the new 0.5% floor. But your annual deduction is generally limited to 60% of your AGI. Any excess may be carried forward for up to five years.

Be aware the IRS imposes strict recordkeeping rules for cash contributions. For instance, for cash donations of $250 or more, you must obtain a contemporaneous written acknowledgment from the charity before filing your income tax return.

Property Donations

Several special rules apply to charitable gifts of property. For starters, property donations are subject to lower annual deduction limits.

On the plus side, there’s a big tax break if you donate certain appreciated property you’ve held longer than one year that would have qualified for long-term capital gains rates had you sold it instead of donating it. In this case, you can deduct the property’s current fair market value. Thus, any appreciation in value while you owned the property will be untaxed. Examples of eligible property include publicly traded securities and mutual funds. However, your annual deduction for such donations is typically limited to 30% of AGI. 

For tangible property, how the charity uses the property may affect the amount of your deduction. For example, if you donate a car, unless it’s being used by the charity to further its charitable mission (such as a social services charity using a van to deliver meals to the elderly), you generally may deduct only the amount the charity receives when it sells the vehicle. But a 50% of AGI limit typically applies to deductions for donations where you can’t deduct the fair market value, rather than the 30% limit. 

These are just a few examples of rules property donation deductions; property-specific rules may apply, so be sure to consult with your tax advisor. 

Quid-Pro-Quo Contributions

Generally, if you receive a benefit in return for making a donation, your deduction amount is reduced. For such a “quid pro quo contribution,” the charity must provide a good-faith estimate of the goods and services you received. You can deduct the difference between the amount donated and the value of the benefit received — nothing more.

For example, let’s say you attend a fundraising dinner cruise costing $300. If the charity values the meal and boat ride at $100 per person, your deduction is limited to $200. However, most low-cost items and nominal gifts, like coffee mugs or pens featuring the charity’s logo, don’t have to be subtracted from your deduction.

Volunteer Expenses

You can’t deduct the value of the time you spend helping a charity, but itemizers can write off related out-of-pocket expenses, such as supplies and mileage. The deductible mileage rate for charitable miles driven is 14 cents per mile.

Travel and lodging expenses can qualify if incurred while attending events or participating in activities on behalf of the charity. However, travel expenses can’t be deducted if the trip is merely a disguised vacation. 

Achieving Your Charitable Giving Goals

If you itemize deductions, charitable donations can be a powerful tax-saving tool, but there’s much to consider as you plan your giving for the rest of the year. Our tax pros are here to answer your questions and help you create a charitable giving strategy that aligns with your philanthropic and tax goals.