CARES Act Tax Advantage for Charitable Givers

Tis the season of giving! As you make plans for your year-end giving to charity we wanted to make sure you know about some advantages on your federal taxes, when you act by December 31st. 

New Tax Advantages for Donors!  

There is a new financial incentive for Americans to give generously to qualifying charities, including Esperança. The new universal tax break for charitable donations is now in effect for the 2020 tax year. The measure grants all federal taxpayers an above-the-line deduction for up to $300 in charitable donations given by December 31, 2020. 

Recognizing that financial support to nonprofit organizations will suffer in the current economic environment – at a time when additional charitable support is greatly needed – the CARES Act has several provisions for both individual and corporate donors to encourage charitable giving. 

New $300 Deduction for Qualified Charitable Donations 

The Universal Charitable Deduction permits all individuals who do not itemize their taxes to deduct contributions to most charities. Individuals who take the standard deduction can now claim an above-the-line tax deduction for cash donations up to $300 to qualified charitable organizations. There is currently no sunset date on this provision. Esperança and other charities hope that this law will remain in effect or even increase in years to come. 

Corporations’ 10% Limit Increased to 25% for 2020 

For the 2020 tax year, corporations can deduct up to 25% of the taxpayer’s taxable income for any cash contributions made to qualified charitable organizations.  Deductions for cash donations were previously limited to 10% of the taxpayer’s taxable income. 

60% of AGI Limit Suspended for 2020 

The usual deduction limit for cash gifts to public charities is 60% of adjusted gross income (AGI).  For the 2020 tax year, individuals can deduct any cash contributions made to qualified charitable organizations, up to 100% of their adjusted gross income (AGI).  The gift may be for any charitable purpose, 

A second provision modified limitations on charitable contributions for those who itemize their donations. These incentives are available to individuals during the 2020 tax year. 


In the second provision, the CARES Act completely suspends the limitation on deductions for individuals who itemize their donations. The deduction is for cash only. It does not include stocks or other non-cash assets. It also does not apply to contributions to Donor Advised Funds (DAFs). For taxpayers in this bracket, excess contributions may be carried over for the next five years. 

Required Minimum Distribution (RMD) Waiver 

The Required Minimum Distribution has been waived for IRA and other qualified retirement plan owners for the 2020 tax year.  This provision will permit IRA and other qualified retirement plan owners to retain funds in their IRAs.  Because the markets declined substantially after the current RMD was calculated on December 31, 2019, Congress determined that it was beneficial to waive the RMD for 2020.  However, donors can still choose to use IRA funds to make a qualified charitable distribution. 

For questions about this information please consult your tax advisor or financial planner. 

To see some uplifting news about the impact made from your gifts read our Latest Stories.  

Make your donation today and help us achieve our vision of Healthy Equity for ALL.