8543 / What are the income percentage ceilings that limit the income tax deduction for charitable contributions?
Editor’s Note: The 2020 CARES Act made several changes designed to encourage charitable giving during the COVID-19 outbreak. For the 2020 tax year, the CARES Act amended IRC Section 62(a), allowing taxpayers to reduce adjusted gross income (AGI) by $300 worth of charitable contributions made in 2020 even if they do not itemize. The CARES Act also lifted the 60 percent AGI limit for 2020. Congress later extended these benefits for 2021. Cash contributions to public charities and certain private foundations in 2020 and 2021 were not subject to the AGI limit (contributions to donor advised funds, supporting organizations and private grant-making organizations remained subject to the usual AGI limits). Individual taxpayers could offset their income for 2020 and 2021 up to the full amount of their AGI, and additional charitable contributions could be carried over to offset income in a later year (the amounts were not refundable). The corporate AGI limit was raised from 10 percent to 25 percent (excess contributions also carried over to subsequent tax years). Taxpayers were required to elect this treatment.2
50 (or 60) percent ceiling. For a charitable contribution of money, an individual is allowed a charitable deduction of up to 50 (or 60 for 2018-2025) percent of his or her adjusted gross income if made to the following types of organizations: churches, schools, hospitals or medical research organizations, organizations that normally receive a substantial part of their support from federal, state, or local governments or from the general public and that aid any of the above organizations, and federal, state, and local governments. Also included in this list is a limited category of private foundations (private operating foundations and conduit foundations3) that generally direct their support to public charities.4 The above organizations are often referred to as “public charities” or “50 (or 60)-percent-type charitable organizations.”
Thus, a monetary contribution to a public charity is limited to 50 (or 60) percent of adjusted gross income. The excess amount is carried over for a period of five years subject to the same limitations. Any amount of a charitable contribution not deducted within that time period is lost.5
Example: In 2025, Asher made a monetary charitable contribution of $35,000 to a public charity. Asher’s adjusted gross income is $50,000. Due to the 60 percent ceiling, Asher’s contribution is limited to $30,000 (60 percent of $50,000). The remaining $5,000 is carried over to the next year subject to the same limitations for up to five years.