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How to Save More on Taxes Through Charitable Giving
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This article was written by the Team NonProfit staff writers. We’re a collaborative crew of nonprofit professionals passionate about sharing insights, asking good questions, and learning alongside others who care about doing good. Whether you’re just starting out or deep in the work, we’re glad you’re here.
Charitable donations don’t just support causes you care about—they can also reduce your tax bill. Smart giving strategies can maximize both your philanthropic impact and tax benefits. Here’s how.
1. Understand the Tax Deduction Rules
- Only donations to 501(c)(3) nonprofits are tax-deductible.
- You must itemize deductions on your tax return to claim a deduction.
- The IRS allows deductions up to 60% of your adjusted gross income (AGI) for cash donations (30% for appreciated assets).
2. Donate Appreciated Assets Instead of Cash
Instead of giving cash, consider donating stocks, mutual funds, or real estate that have increased in value.
✅ Avoid capital gains tax (typically 15%-20%)
✅ Deduct the fair market value of the asset
✅ More money goes to charity than if you sold the asset first
3. Use a Donor-Advised Fund (DAF)
DAFs are charitable investment accounts that allow donors to:
- Contribute cash, stocks, or other assets
- Get an immediate tax deduction
- Distribute funds to charities over time
DAFs work well if you want to:
✔ Bunch multiple years’ worth of donations into one year
✔ Reduce taxable income in a high-earning year
✔ Create a structured giving plan
4. Bundle or “Bunch” Your Donations
If your total deductions are close to the standard deduction ($14,600 for single filers, $29,200 for married couples in 2024), consider bunching donations by giving two or more years’ worth of gifts in one tax year. This way, you can surpass the threshold and itemize deductions.
5. Consider Qualified Charitable Distributions (QCDs)
For those 70½ or older, a QCD allows you to donate up to $100,000 per year directly from an IRA to charity.
✅ Avoid income tax on required minimum distributions (RMDs)
✅ Lower taxable income, reducing Medicare premiums
6. Get Tax Benefits for Volunteer Expenses
While volunteer time is not deductible, you can deduct related expenses, including:
✔ Mileage driven for charitable work ($0.14 per mile in 2024)
✔ Uniforms or supplies purchased for volunteering
✔ Travel costs if you volunteer away from home
Final Thoughts
A little tax planning can make your charitable giving go further. By leveraging these strategies, you can increase your impact while reducing your tax liability.