Expanded Tax Benefits for 2021 Charitable Contributions
The Taxpayer Certainty and Disaster Tax Relief Act of 2020 generally extends the temporary tax changes originally enacted by the CARES Act through the end of 2021. These expanded tax benefits can help individuals and businesses give to charity before the end of this year.
- $300 deduction for individuals who don’t itemize
Ordinarily individuals who take the standard deduction cannot claim a deduction for their charitable contributions. However, the law now permits these individuals to claim a deduction of up to $300 for cash contributions made to qualifying charities during 2021. The maximum deduction is increased to $600 for married individuals filing joint returns.
- 100 percent limit on eligible cash contributions made by itemizers
Individuals who itemize may generally claim a deduction for charitable contributions made to qualifying charitable organizations, from 20 percent to 60 percent of adjusted gross income (AGI). The law now permits electing individuals an increased limit of up to 100 percent of their AGI for qualified contributions made during 2021.
- Corporate limit increased to 25 percent of taxable income
Normally, the maximum allowable deduction is limited to 10 percent of a corporation’s taxable income. The law now permits C corporations to apply an increased limit of 25 percent of taxable income for charitable contributions of cash they make to eligible charities during 2021. C corporations must elect the increased limit on a contribution-by-contribution basis.
Read more here, including details about increased limits on amounts deductible by businesses for certain donated food inventory.