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For many, the spirit of giving to charitable causes is a year-round activity, but the end of the year brings a special focus on tax season. If you are one of the millions of Americans who donate to qualified charities, you may be able to reduce your tax bill. This article explains how to properly deduct your charitable contributions on Form 1040 and what to keep in mind to make the most of your generosity.

 

 

The Foundation of Your Deduction: Itemizing vs. the Standard Deduction

The most critical factor in claiming a charitable deduction is deciding whether to itemize your deductions. For your charitable contributions to be tax-deductible, you need to prepare Schedule A and attach it to your Form 1040.

Itemizing makes sense only if your total itemized deductions, which include charitable gifts, state/local taxes, mortgage interest, etc. exceed the standard deduction for your filing status.

Filing Status  2025 Standard Deduction

Single                                            $15,750

Married Filing Jointly                $31,500

Head of Household                   $23,625

Additional standard deductions for those 65 and older

If you are 65 or older and/or blind, you can claim an extra standard deduction. For tax year 2025:

• For single filers or heads of households, the additional deduction is $2,000.
• For married couples filing jointly or separately, the additional deduction is $1,600 per qualifying individual. 

Taxpayers typically choose whichever deduction (standard vs itemized) provides a larger tax break.

Required Documentation for All Donations

Regardless of the amount, it is essential to keep a record of all charitable donations. The IRS requires different levels of documentation depending on the type and size of the contribution.

For cash donations, a bank record (such as a canceled check or credit card statement) or a written communication from the qualified organization is sufficient. The record must show the name of the charity, the date, and the amount of the contribution.

Special Rules for Donations Over $250

For any single donation of $250 or more (whether cash or property), you must obtain a contemporaneous written acknowledgment from the charity. This acknowledgment must contain the following:

The name of the organization.

The amount of any cash contribution or a description of any non-cash contribution.

A statement regarding whether the organization provided any goods or services in exchange for the gift.

If goods or services were provided, a good-faith estimate of their value.

Deducting Non-Cash Contributions (Over $500)

Donating property, such as clothes, furniture, or stocks, is also deductible, but it comes with additional rules.

Valuation: For used household items, you can only deduct their fair market value—what they would sell for in a thrift store—if they are in at least “good used condition or better”. For more valuable items like stocks or real estate, special valuation rules apply.

If your total non-cash contributions exceed $500, you must file Form 8283, Noncash Charitable Contributions, with your tax return.

Qualified Appraisal: If you are claiming a deduction of more than $5,000 for any single item or a group of similar items, you must get a qualified appraisal from an expert.

Limitations on Your Deduction

There are limits on how much you can deduct in a single year, based on your Adjusted Gross Income (AGI).

Cash Contributions: Deductions for cash given to public charities are generally limited to 60% of your AGI.

Appreciated Property: The limit for gifts of appreciated property is typically 30% of your AGI.

If your total contributions exceed these limits in one year, you can carry over the excess amount and deduct it over the next five years.

QCD’s

A Qualified Charitable Distribution (QCD) is a direct, tax-free transfer from an Individual Retirement Account (IRA) to an eligible charity. A charitable deduction, on the other hand, is a contribution made from a personal account or income that you can deduct if you itemize deductions on your tax return. The primary difference is how the tax benefit is received.

Aspect	Qualified Charitable Distribution (QCD)	Charitable Deduction
Eligibility	You must be 70½ or older to make a QCD.	There are no age requirements to claim a charitable deduction.
Contribution Source	The funds must be transferred directly from a traditional IRA, inherited IRA, or inactive SEP/SIMPLE IRA. The funds cannot pass through your personal bank account.	The donation can come from any personal source, such as a checking account, a brokerage account (stocks), or other assets.
Tax Benefit	The distributed amount is excluded from your gross income, so it is not taxed. You do not claim an itemized deduction for a QCD.	You claim a deduction on Schedule A of your tax return, which reduces your taxable income.
Itemization	You receive the tax benefit automatically, even if you take the standard deduction. A QCD is particularly beneficial for those who do not itemize.	The deduction only benefits you if you itemize your deductions and your total itemized deductions exceed the standard deduction.
Required Minimum Distribution (RMD)	QCDs can be used to satisfy all or part of your RMD (if you are required to take one, beginning at age 73).	Making a regular charitable gift does not satisfy an RMD.
Income Impact	Excludes the distribution from your adjusted gross income (AGI), which can help keep your income below certain thresholds. This may help you avoid or reduce taxes on Social Security benefits and high-income Medicare surcharges.	Reduces your taxable income, but does not affect your AGI.
Contribution Limit	For 2025, the annual limit is $108,000 per individual ($216,000 for a married couple).	Annual limits apply as a percentage of your adjusted gross income (AGI). The limit is 60% for cash donations to public charities.
Eligible Charities	Generally, only public charities qualify. Donations to donor-advised funds (DAFs) and private foundations are not permitted.	A broader range of charitable vehicles, including DAFs and private foundations, are eligible.

Which is better?

Choosing between a QCD and a charitable deduction depends on your specific financial situation:

• Choose a QCD if you are 70½ or older, especially if you do not itemize your deductions. The QCD allows you to get a tax benefit for your charitable giving, even if the standard deduction is higher than your total itemized deductions.
• Choose a charitable deduction (and itemize) if your itemized deductions exceed the standard deduction, and you are not yet 70½. This strategy may also be more beneficial if you wish to donate non-IRA assets, like appreciated stock, which offers the added tax benefit of avoiding capital gains tax.

 

What You Cannot Deduct

To avoid mistakes, remember that the following are generally not deductible:

Value of your time: While volunteering is noble, you cannot deduct the value of your services. Volunteer work you perform for a qualifying organization may generate a deduction, but not for the value of your time. You can only deduct out-of-pocket expenses, including the miles you drive, parking fees, tolls, materials, and supplies.

Gifts to individuals: Contributions to family, friends, or specific individuals (like on crowdfunding platforms) are not tax-deductible.

Political donations: Contributions made to political candidates, parties, or action committees are not deductible.

Items of little value: The IRS has the authority to deny deductions for items like used socks or underwear, emphasizing that items must be in “good used condition”.

Recent legislation known as the “One Big Beautiful Bill Act” (OBBBA), signed into law in July 2025, introduces major changes to charitable deductions that will take effect starting in the 2026 tax year. For the 2025 tax year, charitable deduction rules largely remain the same as previous years under the 2017 Tax Cuts and Jobs Act (TCJA). 

Changes taking effect in 2026

• Charitable deduction floor for itemizers: Individuals who itemize can deduct the portion of contributions exceeding 0.5% of their Adjusted Gross Income (AGI).
• Universal deduction for non-itemizers: Non-itemizers can claim an “above-the-line” deduction for cash donations, capped at $1,000 for single filers and $2,000 for married couples filing jointly. This deduction is not for contributions to donor-advised funds (DAFs) or private foundations.
• Cap on deduction value for high earners: For those in the top 37% tax bracket, the tax benefit of itemized deductions, including charitable donations, is capped at 35%.
• Permanent 60% AGI limit for cash gifts: The ability to deduct cash contributions up to 60% of AGI is made permanent for individuals.

Charitable deduction rules for 2025

For the current 2025 tax year, the following rules apply:

• Itemization required: Deductions are only available if you itemize.
• No deduction floor: There is no minimum income threshold for itemized charitable donations.
• 60% AGI limit for cash: The limit for cash gifts to public charities is 60% of your AGI.
• 37% tax bracket benefit: High-income donors in the top 37% bracket receive a 37% tax reduction.
• Qualified Charitable Distributions (QCDs): Individuals 70½ and older can transfer up to $108,000 directly from an IRA to a qualifying charity, not subject to the new 2026 rules.

Strategies for 2025 charitable giving

The upcoming 2026 changes make strategic giving in 2025 important, especially for higher-income donors.

• For high earners: Accelerating giving into 2025 may be beneficial to utilize the higher 37% deduction before the 35% cap.
• For itemizers (and non-itemizers): Bunching multi-year contributions into 2025 can help avoid the new 0.5% AGI floor starting in 2026.
• Using a Donor-Advised Fund (DAF): This allows an immediate tax deduction in 2025 while granting funds later.
• Non-cash asset donations: Giving appreciated stock or other non-cash assets can provide additional tax benefits and help meet deductibility thresholds.

A Step-by-Step Approach for Claiming Donations on Form 1040

Track your giving: Keep a running list of all your charitable donations throughout the year, including the date, amount, and charity’s name.

Gather receipts: For all donations, collect the necessary bank records or written acknowledgments from the charities.

Total your itemized deductions: At tax time, add up your charitable gifts and other itemized deductions, such as mortgage interest and state and local taxes, on Schedule A.

Compare deductions: Compare the total from Schedule A to your standard deduction. If your itemized total is higher, use it to reduce your taxable income.

Complete all necessary forms: Fill out Schedule A and, if necessary, Form 8283 for your non-cash contributions.

File your return: Attach completed Schedule A and Form 8283 to your Form 1040 and file your return.

Conclusion:

By carefully tracking your contributions and following the IRS’s rules, you can ensure that your generous giving is properly reflected on your Form 1040. Not only will you be supporting the causes you care about, but you may also be rewarded with a lower tax bill. If you have significant or complex donations, consider consulting a tax professional to ensure you are maximizing your deductions correctly.

As always, Miller Musmar is here to answer any questions you may have. Please feel free to contact us if you need assistance.

Written by Kelly Drost, CPA, Senior Tax Accountant at MillerMusmar CPA.