The Impact of the CARES Act on Charitable Giving
In March 2020, the CARES (Coronavirus Aid, Relief, and Economic Security) Act was signed into law to help people and organizations facing economic hardship during the COVID-19 pandemic. The bill also provides increased charitable giving tax incentives designed to stimulate philanthropy throughout the nation in a time when it is needed most.
Below is summary of charitable giving tax provisions that may assist you with your charitable goals.
- Temporary Universal Charitable Deduction: Individual taxpayers who claim the standard deduction rather than itemizing their deductions may claim a charitable deduction up to $300 in 2020. Although modest in dollar amount, this universal charitable deduction presents an opportunity for the approximately 90% of U.S. taxpayers who do not itemize to enjoy a tax benefit for assisting charitable causes such as the University of Oklahoma Foundation, Inc.
- Temporary Increase in Individual Income Limitations on Charitable Deductions: For those who do itemize their tax deductions, individual taxpayers may deduct charitable contributions up to 100% of their adjusted gross income in 2020, temporarily replacing rules limiting charitable deductions to 60% or less of a taxpayer’s adjusted gross income.
- Raised Income Limitation on Corporate Charitable Deductions: Corporate taxpayers may deduct charitable contributions up to 25% of their taxable income in 2020, temporarily replacing the rule limiting corporate charitable deductions to 10% of taxable income.
- Qualified Charitable Deductions from Inherited Retirement Accounts (IRAs): Required minimum distributions (“RMDs”) from IRAs have been eliminated for 2020. As a result, a qualified charitable distribution from an IRA will not reduce an RMD that would otherwise be included in the IRA beneficiary’s income for tax purposes. However, if an IRA beneficiary receives a taxable IRA distribution in 2020, an offsetting charitable deduction will generally be available since the individual income limitations on charitable deductions have been temporarily suspended.
The 2020 tax year ends on Thursday, December 31. To help you with your year-end philanthropic plans, please reference the OU Foundation's information about holiday giving.
More information about coronavirus tax relief is available via the IRS.
The information on this webpage is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results.