You may have heard a lot about the CARES Act and its direct financial assistance for small businesses, nonprofits and employees. The CARES Act includes a number of other important provisions, including ones that encourage charitable giving from both individuals and corporations. We are already seeing individuals and businesses contribute to the COVID-19 response in important ways – these incentives can help encourage more of that.
- Above-the-line charitable contribution deduction. Under this new charitable giving incentive, individuals can deduct up to $300 of donations, even if they don’t itemize on their tax return. This means that a lot more people can receive a tax benefit from making charitable contributions.
- Elimination of cash donation cap for individuals. Individuals can now contribute 100% of their adjusted gross income (AGI) in 2020 to public charities if they want. The previous limit was 60% of AGI.
- Higher cap on corporate donations. Corporations can now donate up to 25% of their taxable income as a charitable contribution in 2020, up from 10%.
- Higher cap on donations of food inventory. During 2020, corporations may donate up to 25% of taxable income for food inventory, up from 15%.
For more information on changing laws that affect nonprofits during this pandemic, please visit the COVID-19 page of our website.