Tax Minute

2021 CHARITABLE CONTRIBUTIONS

When the tax laws were overhauled in 2018 most taxpayers that were itemizing their deductions switched to the standard deduction. This eliminated the tax incentive for many people to make charitable contributions. Everyone is aware of the CARES act which generated the COVID stimulus payments that the vast majority of taxpayers received. What many taxpayers are still not aware of is the change to charitable contribution deductions contained in the new law. Tucked into the $2 trillion CARES act is a provision that allowed for a $300 charitable deduction per return for 2020. For 2021, single taxpayers who take the standard deduction can deduct up to $300 in charitable contributions and taxpayers filing jointly to deduct up to $600 in charitable contributions on top of their normal standard deduction. The CARES act also removed the limitation on charitable contributions for taxpayers who itemize. They are now allowed to deduct charitable contributions of up to 100% of their adjusted gross income.

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