Individuals are allowed to claim itemized deductions for charitable contributions to qualified organizations. Giving money to an individual or a foreign organization generally isn’t deductible, except for donations made to certain qualifying Canadian not-for-profits.
If a contribution entitles you to merchandise, goods or services — such as admission to a charity ball, banquet or theatrical performance — you can deduct only the amount that exceeds the fair market value of the benefit received. The proposed regulations on the SALT limitation (see main article) extend this quid-pro-quo principle to state tax benefits provided to a donor in return for making charitable contributions.
Before 2018, the deduction for charitable contributions generally couldn’t be more than 50% of your adjusted gross income (AGI) — and, in some cases, 20% and 30% limits applied. Any contributions that exceeded these limits could be carried over.
The TCJA retains the itemized deduction for charitable contributions and the carryover provision, and it increases the 50% limit to 60%. It also eliminates any deduction for contributions paid to colleges in exchange for athletic event tickets.
Important note: The deduction for charitable contributions is available only to taxpayers who itemize deductions on their federal income tax return; those who take the standard deduction receive no federal income tax incentive to donate. The TCJA substantially increases the standard deduction, so the U.S. Department of Treasury expects only about 10% of taxpayers to itemize deductions on their 2018 returns.
