8543 / What are the income percentage ceilings that limit the income tax deduction for charitable contributions?
Editor’s Note: The 2017 tax reform legislation increased the 50 percent AGI limitation on cash contributions to public charities and certain private foundations to 60 percent. The 2025 OBBB made this limit permanent.1
60 percent ceiling. For a charitable contribution of money, an individual is allowed a charitable deduction of up to 60 (or 50 prior to 2018) 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 foundations2) that generally direct their support to public charities.3 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.4
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.
30 percent limit. The deduction for contributions of most long-term capital gain property to the above organizations, contributions for the use of any of the above organizations, as well as contributions (other than long-term capital gain property) to or for the use of any other types of charitable organizations (i.e., most private foundations, see Q 8546) is limited to the lesser of (a) 30 percent of the taxpayer’s adjusted gross income, or (b) 50 (or 60) percent of adjusted gross income minus the amount of charitable contributions allowed for contributions to the 50 (or 60) percent -type charities.5
20 percent limit. The deduction for contributions of long-term capital gain property to most private foundations (see Q 8074) is limited to the lesser of (a) 20 percent of the taxpayer’s adjusted gross income, or (b) 30 percent of adjusted gross income minus the amount of charitable contributions allowed for contributions to the 30 percent -type charities.6 Deductions denied because of the 50 (or 60) percent, 30 percent, or 20 percent limits may be carried over and deducted over the next five years, retaining their character as 50 (or 60) percent, 30 percent, or 20 percent type deductions.7
Gifts are “to” a charitable organization if made directly to the organization. Even though the gift may be intended to be used by the charity, and the charity may use it, if it is given directly to the charity, it is a gift to the charity and not “for the use of” the charity, for purposes of the deduction limits. Unreimbursed out-of-pocket expenses incurred on behalf of an organization (e.g., unreimbursed travel expenses of volunteers) are deductible as contributions “to” the organization if they are directly related to performing services for the organization (and, in the case of travel expenses, there is no significant element of personal pleasure, recreation, or vacation in such travel).8
“For the use of” applies to indirect contributions to a charitable organization.9 The term “for the use of” does not refer to a gift of the right to use property. Such a gift would generally be a nondeductible gift of less than the donor’s entire interest.
COVID-Era Relief
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.10
1. IRC § 170(b)(1)(G)(i).
2. IRC § 170(b)(1)(E).
3. IRC § 170(b)(1)(A).
4. IRC § 170(d).
5. IRC §§ 170(b)(1)(B), 170(b)(1)(C).
6. IRC § 170(b)(1)(D).
7. IRC §§ 170(d)(1), 170(b)(1)(D)(ii); Treas. Reg. § 1.170A-10(b).
8. IRC § 170(j); Rockefeller v. Commissioner, 676 F.2d 35 (2d Cir. 1982), aff’g, 76 TC 178 (1981), acq. in part 1984-2 CB 2; Rev. Rul. 84-61, 1984-1 CB 39. See Rev. Rul. 58-279, 1958-1 CB 145.
9. Treas. Reg. § 1.170A-8(a)(2). See Davis v. United States, 495 U.S. 472 (1990).
10. CARES Act § 2205; IRC § 62(a)(22), added by the 2020 CARES Act.