Limits on Contributions

While there are no general limits on how much you can donate annually, there are some limits on how much you can deduct for tax purposes. The amount of charitable cash contributions taxpayers can deduct on Schedule A as an itemized deduction is generally limited to 60% of the taxpayer’s adjusted gross income (AGI).

The 60% limit was temporarily suspended during 2020 and 2021, when the CARES Act let individuals elect to deduct qualifying cash contributions up to 100% of AGI (and raised the corporate cash limit to 25% of taxable income). That relief has expired: for 2022 and later, cash contributions to public charities are again limited to 60% of AGI for individuals and 10% of taxable income for corporations. Contributions exceeding the applicable limit can be carried over for up to five years.

To be deductible, a contribution must be made to a qualifying organization as defined in section 170(c) of the IRC, which includes:

• A state or United States possession, if made exclusively for public purposes.
• Certain charitable, religious, educational, scientific, or literary organizations.
• Organizations for the prevention of cruelty to children or animals.
• A war veterans’ organization.
• Nonprofit volunteer fire companies.
• Civil defense organizations created under federal, state, or local law.
• Domestic fraternal societies operating under the lodge system, but only if the contribution is to be used exclusively for charitable purposes.
• Nonprofit cemetery companies if the funds are irrevocably dedicated to the perpetual care of the cemetery as a whole.

In general, contributions to charitable organizations may be deducted up to 50% of AGI, computed without regard to net operating loss carrybacks. Contributions to certain private foundations, veterans organizations, fraternal societies, and cemetery organizations are limited to 30% of AGI, also computed without regard to net operating loss carrybacks. The IRS Tax Exempt Organization Search uses deductibility status codes to indicate these limitations.

The 50% limitation applies to:

1.

All public charities (code PC).

2.

All private operating foundations (code POF).

3.

Certain private foundations that distribute the contributions they receive to public charities and private operating foundations within 2-1/2 months following the year of receipt.

4.

Certain private foundations where contributions are pooled in a common fund, and the income and corpus are paid to public charities.

The 30% limitation applies to private foundations (code PF), other than those qualifying for the 50% limitation, and to other organizations described in section 170(c) that do not qualify for the 50% limitation, such as domestic fraternal societies (code LODGE).