The CARES Act establishes several new tax provisions that increase the tax benefits available for charitable giving—including a new tax benefit for charitable giving available to the millions of taxpayers that take the standard deduction.
- The Act allows taxpayers to take an above-the-line deduction for charitable cash contributions up to $300 for the 2020 tax year. This deduction is available for taxpayers who do not itemize their deductions, and will apply to all years moving forward.
- For taxpayers who itemize deductions, the CARES Act increases the charitable deduction amount for cash contributions to public charities. For individuals, the amount has been increased from 60% to 100% of adjusted gross income, and for corporations, from 10% to 25% of taxable income. It is important to note that this provision applies to cash contributions made to public charities, and will not apply to contributions made to private foundations or donor advised funds.
- Above the deductibility cap of 100% of AGI for individuals, additional contributions may be carried forward and deducted over the next five years. The same carryover period will apply to corporations exceeding their cap of 25% of taxable income. (Note that each partner or shareholder in a partnership or S Corporation must make carryover elections separately.)