CARES Act expands tax deductions for charitable giving

The CARES (Coronavirus Aid, Relief and Economic Security) Act, the government stimulus  bill that was signed into law in late March, will increase the ability for many individuals to deduct a portion of their charitable contributions:

  • Beginning in 2020, individuals that do not itemize and instead use the standard deduction, will be allowed to deduct up to $300 of qualified cash charitable contributions.
  • The act also temporarily suspends the deductibility limitations based on adjusted gross income for qualified cash charitable contributions made during 2020. In essence, if all of an individual’s contributions are qualifying they will be able to deduct the full amount of these contributions up to their adjusted gross income.

Charitable Giving Incentive: Includes a new above-the-line deduction (universal or non-itemizer deduction that applies to all taxpayers) for total charitable contributions of up to $300. The incentive applies to contributions made in 2020 and would be claimed on tax forms next year  (Section 2204). The bill also lifts the existing cap on annual contributions for those who itemize, raising it from 60 percent of adjusted gross income to 100 percent.

For corporations, the bill raises the annual limit from 10 percent to 25 percent. Food donations from corporations would be available to 25 percent, up from the current 15 percent cap (Section 2205).