Changes to Charitable Giving Under the CARES Act

The recently passed CARES Act contains multiple economic relief provisions designed to stimulate the economy. Of interest to nonprofits are updates designed to increase charitable giving during the crisis caused by COVID-19 by providing tax relief to donors through increased charitable giving deductibility limits and through a new deduction available to individuals.

For individuals, certain contributions are now allowed to be deducted at up to 100% (up from 60%) of adjusted gross income (AGI), less non-qualifying contributions. Any excess may be carried forward. For corporations, the deductibility limit has been increased to 25% of taxable income (up from 10%), less non-qualifying contributions. Corporations may carry forward their excess qualifying deductions as well. The deduction threshold for donations of food items has been increased from 15% to 25% for both individuals and corporations.

However, there are important qualifiers to be aware of. The gifts must be made in calendar year 2020, in cash. Noncash donations will not qualify for the increased limits. Only gifts to public charities (schools, hospitals, and other publicly-supported organizations described in Section 170(b)(1)(A)) qualify for the increased limits. Contributions to most private foundations and donor advised funds are still subject to the lower limits.

Individuals have also been granted a new deduction of up to $300 of qualified charitable contributions made during tax year 2020. This deduction is only available to taxpayers who do not itemize their deductions, is not subject to the normal contribution amount limits, and only applies to cash donations. This additional deduction also only applies to gifts made to public charities.

The CARES Act contains a number of economic relief provisions and changes to the tax code. Johnson Lambert has released a webinar and published an article detailing other provisions of the CARES Act. 

If you have any questions related to this or any other topic, please reach out to the Johnson Lambert Team

This communication is intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

Andrew Hassler
Andrew Hassler | Tax Associate
J. Calvin Marks
J. Calvin Marks | Senior Manager