This is a great time to make a powerful, life-changing difference in the lives of our local kids and community. Thanks to the CARES Act of 2020 and the Consolidated Appropriations Act of 2021, donors are eligible for additional federal income tax deductions.
The CARES Act made a new charitable deduction available to individual taxpayers that do not itemize their deductions. This benefit, also referred to as a universal deduction, allows for a charitable deduction for cash contributions to qualifying public charities of up to $300 per individual. The recently enacted Consolidated Appropriation Act of 2021 further extends this benefit permitting a charitable deduction of up to $600 on their 2021 federal income tax return for couples filing jointly. This is an above-the-line contribution that is deducted from the individual taxpayer’s income prior to the calculation of their adjusted gross income.
In addition to the universal deduction, the CARES Act provides incentives for both individuals and corporations by temporarily increasing the available deductions on qualified charitable contributions. The Consolidated Appropriations Act of 2021 extends these increased limits through 2021:
- Individual taxpayers who itemize their deductions can deduct 100% of their adjusted gross income on their 2021 federal income tax return. Beyond the scope of the CARES Act, as supplemented by the Consolidated Appropriations Act of 2021, the deduction for qualified charitable contributions made by itemizing individual donors is limited to 60% of their adjusted gross income.
- Corporations can deduct 25% of taxable income in 2021. Up from the 10% limit which is generally applicable for corporations outside of the CARES Act as supplemented by the Consolidated Appropriations Act of 2021.
Thank you so much for your thoughtfulness and generosity, which are sincerely appreciated during this time!
This information is not intended as legal or financial advice. For advice or assistance with your particular situation, please consult an attorney or other professional adviser.