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Limits on Contributions

You may give away as much as you like. How much you may deduct in a given year runs on two independent axes that are constantly conflated: what you gave and who received it. Get them straight and the whole schedule falls out of one table; conflate them and you will confidently claim the wrong number.

Table 19.1: Annual AGI Ceilings on the Charitable Deduction
What you give To a public charity (or DAF) To a private foundation
Cash 60% 30%
Long-term appreciated property, deducted at FMV 30% 20%
Long-term appreciated property, electing to deduct basis instead 50% —
Short-term or ordinary-income property (deductible at basis only) 50% 30%

The 60% cash ceiling was a TCJA provision scheduled to lapse back to 50% after 2025; OBBBA made it permanent. Note what it does not cover: 60% applies to cash only. Fund a gift with appreciated stock — the strategy this chapter recommends — and your ceiling drops to 30% of AGI instead of 60%. A donor who plans a large gift against the 60% figure and then funds it with securities will find half of it pushed into carryforward.

Contributions that exceed the applicable ceiling carry forward for five years, retaining their original character and percentage limit. They are used after the current year’s gifts, so a donor who gives at the ceiling every year may never actually consume an old carryforward before it expires. Model this before making a gift far above your ceiling; a deduction you never live long enough to use is not a deduction.

The election that trades rate for room. Under IRC §170(b)(1)(C)(iii), “Certain contributions of ordinary income and capital gain property” you may elect to value all of a year’s long-term capital gain gifts at basis instead of fair market value, which raises the ceiling from 30% to 50%. It is almost always a bad trade — you surrender the untaxed appreciation, which is the entire point of giving property — but it occasionally wins for a donor whose basis is close to market value and who needs the deduction now, not over five years. The election is irrevocable for the year and applies across every qualifying gift made that year, not the single asset in question.

Corporations face a floor as well as a ceiling. A C-corporation’s charitable deduction has always been capped at 10% of taxable income. Beginning in 2026, OBBBA adds a 1% floor under IRC §170(b)(2)(A): contributions below 1% of taxable income are not deductible at all, and — unlike the individual floor — amounts disallowed by the floor are generally lost permanently instead of carried forward, unless total giving also exceeds the 10% ceiling. The practical consequence for a closely held business is stark: token corporate giving is now worth nothing, and an owner who gives modestly through the company should either give meaningfully or give personally instead.

To be deductible at all, a contribution must go to a qualifying organization defined in IRC §170(c), which includes:

The IRS Tax Exempt Organization Search reports each organization’s deductibility status code, which tells you which column of the table above you are in. “PC” (public charity) and “POF” (private operating foundation) get the left column; “PF” gets the right; “LODGE” and similar section 170(c) organizations that are not public charities get the right column too. Two kinds of private foundation are treated as public charities for this purpose: conduit foundations, which pass contributions through to public charities within 2-1/2 months after the year of receipt, and pooled common-fund foundations that pay income and corpus to public charities.

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