Taxpayers who do not itemize their deductions can take a one-time deduction of up to $300 for gifts made to charitable organizations. The provision is intended only for the year 2020; however, in the text of the bill, it states taxable years “beginning in 2020 …” and does not include a sunset date, thus it conceivably could extend beyond 2020. The deduction is ONLY for gifts of cash made in calendar year 2020 and does not cover other types of gifts or contributions made to donor-advised funds or private foundations.
In a typical year, individuals can only take a charitable deduction of up to 60 percent of their adjusted gross income, no matter how much they give. The CARES Act suspends the 60 percent adjusted gross income limitation for individuals’ charitable contributions for the year 2020. Meaning, in 2020 there is no limit, making cash contributions fully deductible.
Finally, the CARES Act increases the cap on how much corporations may deduct for charitable gifts from 10 percent of its taxable income to 25 percent.
To learn more about the CARES Act click here.