How to Navigate Charity Tax Deductions for Your 2025 Tax Return

Key Rules for Claiming Charitable Tax Deductions

As tax season approaches, many filers look for ways to reduce their taxable income, and charitable donations are a common and rewarding way to do so. However, claiming these deductions requires careful attention to the rules set by the Internal Revenue Service (IRS). When you prepare to file your 2024 tax return in 2025, understanding these guidelines is crucial to ensure you get the full benefit you're entitled to without running into issues. The regulations are specific and cover everything from the type of organization you can donate to, the documentation you need, and the limits on how much you can deduct.

Navigating these rules doesn't have to be complicated. By breaking down the requirements into manageable steps, you can confidently account for your generosity on your tax forms. Below are the essential things you need to know about claiming charity tax deductions for the 2024 tax year.

1. You Must Itemize Your Deductions

The most fundamental rule for claiming a charitable deduction is that you must itemize your deductions on your tax return using Schedule A (Form 1040). Most taxpayers choose between taking the standard deduction—a fixed dollar amount that varies based on filing status, age, and other factors—or itemizing their deductions. You should choose the option that results in a larger total deduction.

If the total of all your itemizable expenses (which include charitable contributions, state and local taxes, mortgage interest, and certain medical expenses) is less than the standard deduction amount for your filing status, it generally makes more financial sense to take the standard deduction. In this case, you would not be able to deduct your charitable gifts. Therefore, the first step is always to estimate your total itemized deductions to see if they will exceed your standard deduction amount for the 2024 tax year.

2. Donations Must Be Made to a Qualified Organization

Not every organization that does good work is considered a "qualified charitable organization" by the IRS. To be deductible, your donation must go to an entity that meets the IRS's specific criteria. Generally, these include nonprofit groups organized and operated for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals.

Examples of qualified organizations include churches, synagogues, temples, and mosques; nonprofit hospitals and schools; publicly supported charities like the Red Cross or Goodwill; and veterans' groups. Donations to individuals, political campaigns, or for-profit entities are not deductible. To verify an organization's status, you can use the IRS's online Tax Exempt Organization Search tool. This tool allows you to confirm that the charity is registered with the IRS and eligible to receive tax-deductible contributions before you donate.

3. Understand the Contribution Limits

The IRS places limits on the amount of charitable contributions you can deduct in a single year. These limits are typically based on a percentage of your Adjusted Gross Income (AGI). For most cash contributions made to public charities, you can generally deduct up to 60% of your AGI. For donations of non-cash assets, such as stocks or property, the limits are often lower, typically 30% of your AGI.

If your donations for the year exceed these AGI limits, you don't necessarily lose the deduction. The IRS allows you to carry over the excess amount for up to five subsequent tax years. This carryover provision ensures that very generous donors can still receive a tax benefit for their contributions in the future. It's important to keep track of any carryover amounts from previous years when preparing your current year's return.

4. Keep Meticulous Records of Your Donations

Proper documentation is non-negotiable when it comes to claiming tax deductions. The type of record you need depends on the amount and type of your contribution. For any cash donation, regardless of the amount, you must have a bank record (like a canceled check or a credit card statement) or a written receipt from the charity that includes the charity's name, the date, and the amount of the contribution.

For single contributions of $250 or more (either cash or non-cash), you must obtain a contemporaneous written acknowledgment from the charity. This document must state the amount of the cash and a description of any non-cash contribution. It also must state whether the organization provided you with any goods or services in exchange for the gift and a good faith estimate of their value. "Contemporaneous" means you must receive this acknowledgment by the earlier of the date you file your return or the due date (including extensions) for filing that return.

5. Know the Rules for Non-Cash Donations

Donating goods and property, such as clothing, furniture, or a vehicle, also qualifies for a tax deduction, but valuing these items can be tricky. The amount you can deduct is generally the item's fair market value at the time of the donation. Fair market value is what a willing buyer would pay a willing seller for the item, with neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

For household items and clothing, they must be in "good used condition or better" to be deductible. You can use thrift store value guides to help estimate the fair market value of these items. For larger donations, like a car or a piece of art, the rules become more complex. For property valued at more than $5,000, you will generally need to get a qualified appraisal and fill out Section B of Form 8283 (Noncash Charitable Contributions).

6. Be Aware of Special Circumstances

Certain situations come with unique rules. For instance, if you receive a benefit in exchange for your contribution (such as a ticket to a charity dinner or a tote bag), you can only deduct the amount of your contribution that exceeds the value of the benefit you received. The charity is required to provide you with a good faith estimate of the value of the goods or services you received.

Another special circumstance involves donations made from an Individual Retirement Account (IRA). If you are 70½ or older, you can make a Qualified Charitable Distribution (QCD) of up to $100,000 directly from your IRA to an eligible charity. While a QCD is not deductible as a charitable contribution on Schedule A, it can be excluded from your taxable income and can count toward your required minimum distribution (RMD) for the year. This can be a significant tax advantage, especially for retirees who do not itemize.