IRS Publication 526 – Charitable giving not only supports worthy causes but can also provide significant tax benefits. If you’re planning to deduct donations on your 2025 tax return, IRS Publication 526 is an essential resource. This comprehensive guide breaks down everything you need to know about charitable contributions, including qualified organizations, deduction rules, limits, and recordkeeping requirements. Whether you’re donating cash, property, or your time, understanding these guidelines can help maximize your tax savings while ensuring compliance.
In this SEO-optimized article, we’ll explore the key aspects of IRS Publication 526 based on the latest updates for the 2025 tax year. We’ll cover definitions, examples, and practical tips to make tax season smoother.
What Is IRS Publication 526?
IRS Publication 526, titled “Charitable Contributions,” explains how individuals can claim deductions for donations made to qualified organizations. It details the types of contributions that qualify, how much you can deduct, required records, and reporting methods. The publication is updated annually to reflect tax law changes, and the 2025 version includes new rules on deductions for veteran service organizations and qualified charitable distributions.
A charitable contribution is defined as a voluntary donation or gift to a qualified organization without expecting anything of equal value in return. To claim these deductions, you must itemize on Schedule A (Form 1040), and limits based on your adjusted gross income (AGI) may apply.
Key highlights from the latest edition:
- Deductibility for Veteran Organizations: Starting in 2025, contributions to federally chartered veteran service organizations under section 501(c)(19) are deductible, even if membership isn’t limited to wartime veterans.
- Qualified Charitable Distributions (QCDs): You can make a one-time election for up to $54,000 from an IRA to charities via certain trusts or annuities.
- Conservation Contribution Rules: New disallowance provisions for partnerships and S corporations if contributions exceed 2.5 times the relevant basis.
For the most current details, always refer to the official IRS document or website.
Organizations That Qualify for Deductible Charitable Contributions
Not every donation qualifies for a tax deduction. Contributions must go to “qualified organizations” as defined by the IRS. These include:
50% Limit Organizations (First Category)
- Churches, synagogues, temples, and other religious organizations.
- Educational institutions like schools, colleges, and museums with regular faculty and curriculum.
- Nonprofit hospitals and medical research organizations.
- Government entities (federal, state, local, or tribal) for public purposes, such as public parks or libraries.
- Publicly supported charities, like the American Red Cross or United Way.
- War veterans’ groups and certain private foundations that meet distribution requirements.
Other Qualified Organizations (Second Category)
- Domestic fraternal societies using funds exclusively for charitable purposes.
- Nonprofit cemetery companies (not for private lot maintenance).
- Certain foreign organizations under U.S. treaties (e.g., Canadian, Mexican, or Israeli charities, with limits).
To verify an organization’s status, use the IRS Tax Exempt Organization Search (TEOS) tool or ask the organization directly. Donations to individuals, political groups, or for-profit entities do not qualify.
Tip for Donors: Always confirm qualification before donating to avoid disallowed deductions.
Types of Charitable Contributions You Can Deduct
IRS Publication 526 categorizes contributions into cash and noncash types, each with specific rules.
Cash Contributions
- Includes checks, electronic transfers, credit card payments, and payroll deductions.
- Deduct the full amount in the year paid (e.g., a check mailed in December counts for that year).
- Limit: Up to 60% of AGI for donations to 50% limit organizations.
Noncash Contributions
- Property Donations: Deduct the fair market value (FMV) at the time of donation. FMV is what the item would sell for between a willing buyer and seller.
- Clothing and Household Items: Must be in good used condition or better. Use thrift store prices for valuation; items over $500 not in good condition require an appraisal.
- Vehicles (Cars, Boats, Airplanes): Generally deduct the smaller of FMV or sales proceeds if sold by the charity. Attach Form 1098-C if claiming more than $500.
- Appreciated Property: For stocks or other capital gain property, deduct FMV without paying capital gains tax (subject to limits).
- Inventory and Food Donations: Special rules allow enhanced deductions for wholesome food given to those in need, up to 15% of business income.
- Conservation Easements: Deduct FMV of qualified real property interests for preservation purposes, with limits up to 50% or 100% of AGI for farmers/ranchers.
- Intellectual Property: Initial deduction based on basis or FMV; additional phased deductions (100% in year 1, decreasing to 10% by year 12) based on income generated.
Out-of-Pocket Expenses for Volunteering
- Deduct unreimbursed costs like mileage (at 14 cents per mile), uniforms, or travel (if overnight and no significant personal pleasure).
- Time and services aren’t deductible, but related expenses are.
Examples:
- Donating $1,000 cash to a church: Full deduction (subject to AGI limits).
- Giving used clothing worth $300 to a nonprofit: Deduct FMV if in good condition.
- Vehicle donation sold for $2,900 (FMV $6,000): Deduct $2,900 with proper documentation.
Contributions with benefits (e.g., event tickets) require subtracting the benefit’s value. State tax credits may also reduce your federal deduction.
Limits on Charitable Contribution Deductions
Your total deduction can’t exceed your AGI, and specific percentage limits apply based on the contribution type and organization:
| Contribution Type | Limit as % of AGI | Applies To |
|---|---|---|
| Cash to 50% Limit Organizations | 60% | Public charities, churches, etc. |
| Noncash to 50% Limit Organizations | 50% | General property donations |
| Capital Gain Property to 50% Limit Organizations | 30% (or 50% if basis election) | Appreciated assets like stocks |
| Contributions to Second Category Organizations | 30% or 20% | Fraternal societies, etc. |
| Qualified Conservation Contributions | 50% (100% for farmers/ranchers) | Easements for preservation |
| Food Inventory | 20% | Business donations |
Excess amounts can be carried over for up to 5 years (15 years for conservation contributions). Use Worksheet 2 in Publication 526 to calculate limits.
Caution: For “for the use of” contributions (e.g., in trust), lower limits (30% or 20%) apply.
Recordkeeping and Substantiation Requirements
Proper documentation is crucial to avoid IRS penalties (up to 40% for overstatements).
- Under $250: Bank records or receipts suffice.
- $250–$500: Contemporaneous written acknowledgment (CWA) from the organization, including amount, date, and any goods/services provided.
- Over $500: File Form 8283; include details on property and basis.
- Over $5,000: Qualified appraisal required; organization signs Form 8283 Section B.
- Vehicles and Conservation: Specific forms like 1098-C or appraisals.
Keep records for at least 3 years, including photos for noncash items. For volunteer expenses, maintain logs of miles or costs.
How to Report Charitable Contributions on Your Tax Return?
Report deductions on Schedule A (Form 1040). Attach Form 8283 for noncash over $500, and Form 1098-C for vehicles. If you receive state tax benefits, adjust your federal deduction accordingly.
For complex donations like appreciated property or QCDs, consult a tax professional. See Publication 590-B for IRA-related rules.
Recent Updates and Changes in IRS Publication 526
The 2025 version incorporates:
- Expanded deductibility for veteran organizations.
- One-time QCD election up to $54,000 via charitable trusts.
- Stricter rules on conservation contributions for pass-through entities.
- Clarifications on digital assets (appraisal required if not publicly traded securities).
Always check IRS.gov for developments after publication.
Conclusion: Maximize Your Impact and Savings
Understanding IRS Publication 526 empowers you to give generously while optimizing your tax deductions. By donating to qualified organizations, valuing contributions accurately, and keeping meticulous records, you can support causes you care about and reduce your tax bill. For personalized advice, use IRS resources or speak with a tax advisor.
Download the full Publication 526 PDF from the IRS website to dive deeper. Remember, tax laws evolve, so stay informed for the 2025 filing season. If you’re ready to itemize, start tracking your donations today!