Understanding Tax-Deductible Charitable Donations for 2025

Common Types of Tax-Deductible Donations

As you prepare for the 2025 tax season, understanding which charitable contributions can be deducted is essential for maximizing your return while supporting causes you care about. To claim a deduction, you must donate to a qualified organization and typically must itemize your deductions on your tax return. Below are the most common types of donations that may qualify.

Cash, Check, and Credit Card Donations

This is the most straightforward and common form of charitable giving. When you donate money via cash, a personal check, or a credit or debit card, the amount you contribute is generally fully deductible. It's crucial to maintain meticulous records of these donations. For cash contributions, a receipt from the charity is necessary, regardless of the amount. For checks, a canceled check or a bank statement showing the transaction is sufficient.

For credit card donations, your credit card statement showing the name of the charity, the date, and the amount of the contribution serves as a valid record. For any single cash or non-cash contribution of $250 or more, you must also obtain a contemporaneous written acknowledgment from the charitable organization. This document confirms the amount of your donation and states whether you received any goods or services in return for it.

Non-Cash Donations (Goods and Property)

Donating tangible items like clothing, furniture, household goods, and electronics to organizations like Goodwill or The Salvation Army is another popular way to give. The deductible amount for these items is their fair market value (FMV) at the time of the donation. Fair market value is what a willing buyer would pay for the item in its current condition. It's not the price you originally paid for it.

Proper documentation is key. For non-cash donations, you should get a receipt from the charity that includes their name, the date and location of the donation, and a reasonably detailed description of the property. If the total value of your non-cash contributions for the year exceeds $500, you must fill out IRS Form 8283, "Noncash Charitable Contributions," and attach it to your tax return.

Stocks, Bonds, and Mutual Funds

Donating appreciated securities, such as stocks, bonds, or mutual fund shares that you've held for more than one year, can be one of the most tax-savvy ways to give. When you donate these assets directly to a charity, you can generally deduct their full fair market value on the date of the transfer. More importantly, you typically avoid paying capital gains tax on the appreciation.

This "double benefit" makes it a powerful strategy. For example, if you bought a stock for $2,000 and it's now worth $10,000, donating it directly means you could get a $10,000 deduction and avoid paying taxes on the $8,000 gain. If you sold the stock first and then donated the cash, you would likely have to pay capital gains tax first, reducing the net benefit.

Real Estate

Donating real estate, such as a personal residence, vacation home, or piece of land, can result in a significant tax deduction. Similar to stocks, if you have held the property for more than one year, you can typically deduct its fair market value. This also allows you to avoid paying capital gains tax on the property's appreciation over the years.

Because real estate donations are complex and high-value, they require a qualified appraisal to determine the fair market value. The process involves legal paperwork to transfer the title to the charitable organization, so it's highly recommended to work with both a tax professional and a legal advisor to ensure the transaction is handled correctly.

Vehicle Donations (Cars, Boats, Airplanes)

Donating a car, boat, or airplane can also be tax-deductible, but the rules for determining the deduction amount are specific. The amount you can deduct depends on what the charity does with the vehicle. If the charity sells the vehicle, your deduction is generally limited to the gross proceeds from the sale. The charity must provide you with Form 1098-C, which reports the sale price, within 30 days of the sale.

However, if the charity makes significant use of the vehicle for its operations or makes material improvements before selling it, you may be able to deduct the vehicle's fair market value. In this case, the charity will indicate this on Form 1098-C. It's essential to follow the charity's process and secure the proper documentation to support your deduction.

Qualified Charitable Distributions (QCDs) from IRAs

If you are 70½ or older, you can donate up to $105,000 (for 2024, and indexed for inflation) directly from your Individual Retirement Account (IRA) to a qualified charity. This is known as a Qualified Charitable Distribution (QCD). While a QCD is not technically a tax deduction, it offers a significant tax advantage. The amount distributed as a QCD is excluded from your adjusted gross income (AGI).

This can be more beneficial than a standard deduction because it can help you satisfy your Required Minimum Distribution (RMD) for the year without increasing your taxable income. Lowering your AGI can also help you avoid other income-related penalties, such as higher Medicare premiums.

Out-of-Pocket Expenses for Volunteering

While you cannot deduct the value of your time or services when you volunteer, you can deduct certain out-of-pocket costs you incur while serving a qualified organization. This includes expenses like the cost of gas and oil for your car if you use it for charitable work. You can deduct your actual expenses or use the standard mileage rate for charity, which is set by the IRS each year (it was 14 cents per mile in 2024).

Other deductible expenses might include the cost of a uniform required for your volunteer work, supplies you purchase for a project, or parking fees and tolls. As with all donations, you must keep detailed records of these expenses, such as receipts and a log of the miles you drive.