Keith Baron — Innovator in Tax Strategy, Retirement Planning and Business Success — shares what you need to know about the tax deductible status of charitable donations.
As the holiday season approaches, generosity tends to take center stage. Between year-end giving campaigns and personal acts of kindness, December is one of the most charitable times of the year. But amid the goodwill, many people wonder: are charitable donations tax deductible? The answer is yes — under the right circumstances. Understanding the rules can help you give wisely and maximize your tax benefits.
What Counts as a Tax-Deductible Donation
To qualify for a charity tax write-off, your contribution must go to an organization recognized by the IRS as a 501(c)(3) nonprofit. This includes most religious, educational, and humanitarian organizations, but not individuals, political campaigns, or social clubs. Before donating, use the IRS Tax Exempt Organization Search to confirm your charity’s eligibility.
Cash vs. Non-Cash Donations
Both cash and non-cash gifts can be tax deductible. Cash donations include checks, credit card payments, or digital transfers. Non-cash donations cover goods like clothing, vehicles, or household items.
For non-cash contributions, it’s crucial to determine the item’s fair market value — what a willing buyer would pay in its current condition. If your donation exceeds $500 in value, additional IRS forms (like Form 8283) may be required.
How to Document Your Gifts
Documentation is key to claiming tax-deductible donations. Be sure to keep all records of your donations. Here is an easy checklist to follow when making a donation you intend to claim on your tax filing:
- Always request a written acknowledgment from the charity that includes its name, the amount donated, and a statement that no goods or services were received in return.
- For donations of $250 or more, the IRS requires this written proof before you can claim the deduction.
- Keep digital records, bank statements, and receipts organized—especially if you’re working with a tax professional like Keith Baron, who can help identify which contributions yield the most benefit under your unique financial plan.
Limits on Charitable Deductions
Generally, you can deduct up to 60% of your adjusted gross income (AGI) for cash contributions to qualified charities. Non-cash contributions and donations to certain organizations may have lower limits (20%–30%). If your total donations exceed these thresholds, the excess can often be carried forward for up to five years.
The Holiday Season: A Time for Both Heart and Strategy
Now is the perfect time to review your giving strategy. Year-end donations made before December 31 can count toward your 2025 tax return. As Keith Baron often advises his clients, philanthropy and financial success aren’t mutually exclusive—they can strengthen each other when done thoughtfully.
Whether you’re donating cash, appreciated assets, or volunteering your expertise, aligning generosity with sound planning ensures your impact extends far beyond the holidays.