Changes to Charitable Giving Limits in the CARES Act

The newly passed Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) contains two provisions that will be of interest to folks who want to help their communities this year.  Section 2104 creates an above the line deduction of up to $300 for contributions made in 2020. This is important because after the Tax Cuts and Jobs Act (TCJA) a couple years ago, many folks no longer itemize, which means that they are not eligible to receive a tax benefit for the charitable deductions that they make over the course of the year. So, if you now claim the standard deduction, individual taxpayers can claim a deduction for the amounts up to $300 that they donate to charity. They don’t let you double-dip though, so if you itemize, you would claim your deductions on Schedule A as usual.

Additionally, Section 2105 of the CARES  Act eliminates the cap on individual charitable contributions. Previously, taxpayers couldn’t deduct contributions over 60 percent of their adjusted gross income.  The corporate cap was raised from 10 percent to 25 percent (including the food donation cap, which had been 15{45ef85514356201a9665f05d22c09675e96dde607afc20c57d108fe109b047b6}). Section 2105 only applies to contributions made in 2020.

A link to the two sections is here.

Valerie Sasaki specializes in jurisdictional tax consulting, working closely with Fortune 50 companies involved in audits before the Oregon or Washington Departments of Revenue. She also works with business owners on tax, business, and estate planning issues in Oregon or Southwest Washington.