The CARES Act made a number of well publicized revisions to the tax code, including as to the payment of employee wages and the deduction of interest and net operating losses. Perhaps lesser known are the revisions in the CARES Act relating to charitable giving.
For non-itemizers, there is a new $300 “above the line” deduction on cash contributions made to charities (other than private non-operating foundations, supporting organizations, and donor-advised funds), that is deducted from a taxpayer’s income prior to the calculation of their adjusted gross income. For individuals that itemize deductions, the historical 50% or 60% of adjusted gross income limit on charitable deductions has been raised to 100%, so that an individual will be entitled to take a charitable deduction of up to 100% of their adjusted gross income.
For corporations, the historical charitable deduction limit of 10% of taxable income was raised to 25%.
These tax code revisions provide significant additional incentives for charitable giving in 2020.