Did you know that the CARES Act, a COVID-19 relief bill passed in March, implemented new financial incentives for those who give to nonprofit organizations? Tax deductions usually accompany charitable giving, but this year, a new “above the line” deduction encourages supporters to make a difference as communities across the country recover from the health and economic crisis.
In 2020, taxpayers who take the standard deduction rather than itemizing their taxes are able to claim up to $300 in charitable donations on top of the standard deduction – meaning that anyone who donates to a qualifying organization can receive an additional tax break. This deduction is applied per person, so taxpayers who file jointly can each take advantage of this deduction.
Donors who take the standard tax deduction aren’t the only ones who benefit from the CARES Act – there are also increased incentives for those who itemize their deductions: instead of limiting charitable giving deductions to 60% of a taxpayer’s Adjusted Gross Income (AGI), taxpayers who itemize can take deductions on up to 100% of their AGI. Additionally, corporate donors can take a deduction of up to 25% of the entity’s Adjusted Tax Income, up from 10%.
These incentives apply to donations made in 2020, allowing donors to maximize their impact at a time when it is needed most. Make a gift to a nonprofit of your choice this year to help us stay Itasca Strong.