Charitable contributions have been itemized deductions for individual taxpayers. However, due to the high standard deductions, only 8% of taxpayers itemized. If a taxpayer was in that 8% they got a benefit from charitable contributions, if they were in the other 92% they did not.
To provide a broader benefit, the CARES Act allows an individual to make a cash contribution of up to $300 made to certain qualifying charities and deduct the contribution “above-the-line” in computing adjusted gross income. Thus, the taxpayer receives the deduction in addition to the standard deduction.
This above-the-line deduction is here for 2020 and beyond, but is available only to a taxpayer who does not itemize their deductions.
For those who DO itemize, the new law temporarily lifts the limits on charitable giving for 2020. Cash contributions to public charities have been generally limited to 60% of a taxpayer’s adjusted gross income (AGI). The CARES Act allows such contributions to be deducted up to 100% of AGI for 2020, with any excess contributions available to be carried over to the next five years.
For corporate donors, the limit would increase from 10% of adjusted taxable income to 25%.