The CARES Act and Charitable Contributions

CARES Act

 

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on March 27, 2020. While the impact of the $2.2 trillion response bill is wide, summarized below are key provisions in the CARES Act related to charitable contributions. 

  1. $300 Above-the-Line Charitable Deduction
    • A new above-the-line charitable deduction of up to $300 is available to taxpayers who do not itemize deductions. Up to $600 is available for married couples who file joint returns. 
    • This deduction applies only to qualified cash contributions and does not apply to cash contributions made to donor advised funds or supporting organizations. It also does not apply to carry-over contributions.
    • This deduction has been carried over into 2021.
  1. Charitable Contribution Limitation 
    • For individual taxpayers who do itemize deductions, the CARES Act temporarily suspends the 60% charitable contribution deduction limitation for qualified cash contributions.
    • Individual taxpayers who contribute cash to a public charity, or a limited number of private foundations, may deduct up to 100% of their adjusted gross income after taking into account other contributions subject to charitable contribution limitations.
    • Individual taxpayers can continue to carry forward any excess charitable contributions for five years.
    • Corporations may deduct charitable gifts up to 25% of the corporation’s taxable income (increased from 10%).
    • This enhanced deduction expires after 2021.

For more information about how the CARES Act may impact your specific financial situation, please consult with your tax, legal, or financial advisor(s).