Tax Deduction Limits for Donations: Cash vs. Goods

You donated $5,000 to charity, but the IRS might ignore it completely. Why? Because of the Standard Deduction. Unless your total itemized deductions (donations + mortgage interest + taxes) exceed the standard threshold ($16,100 for singles in 2026), your donation has zero tax impact. Even if you itemize, strict limits apply based on your income (AGI). Here is the breakdown of how much cash versus old clothes you can actually deduct.

BMT Tax Team BMT Tax Team · 📅 Feb 2026 · ⏱️ 5 min read · TAX TIPS › DEDUCTIONS
Cash
60%
Of Your AGI (Limit)High
Goods
30%
Of Your AGI (Limit)Low
Proof
$250+
Receipt RequiredRule

1. The Rule: The “AGI Ceiling”

The IRS caps generosity to prevent people from zeroing out their tax bill completely.

The Percentage Limits
Your deduction limit depends on what you give and who you give it to.
AGI Example: If your Adjusted Gross Income is $100,000:
• Cash Limit (60%): Max deduction is $60,000.
• Goods/Stock Limit (30%): Max deduction is $30,000.

2. Deduction Limits by Type (Checklist)

Different assets have different ceilings. Knowing this prevents audit surprises.

Donation Type Deduction Limit (of AGI) Valuation Method
Cash / Check 60% Face Value. Must have bank record or receipt.
Household Goods 30% Fair Market Value (Thrift Shop Price). Not what you paid for it.
Appreciated Stock 30% Fair Market Value. (No Capital Gains Tax).
To Private Foundation 30% (Cash)
20% (Stock)		 Stricter limits for private family foundations.

3. Timeline: The 5-Year Carryover Rule

If you are super generous and hit the ceiling, the IRS puts the excess in a “savings account” for later.

Year Action Tax Impact
Year 1 Donate Huge
Deduct up to 60% AGI Cap
Year 2-6 Carryover
Use Excess Deduction
Year 7 Expire
Unused Amount Lost Forever
Planning Note
If you plan a massive donation (like a large property or stock portfolio), it is generally strategic to time it in a year where your income is high (high AGI), so the 30% or 60% cap allows for a larger immediate deduction.

4. Strategy: Donating Stock > Cash

The wealthy rarely donate cash. They donate appreciated assets.

  • Scenario: You bought Tesla stock for $1,000. It is now worth $10,000.
  • Option A (Sell & Donate): You sell, pay $1,350 in capital gains tax (15%), and donate the remaining $8,650. Deduction = $8,650.
  • Option B (Donate Directly): You transfer the stock to the charity. Charity sells it (tax-free). You get a deduction for the full $10,000. You pay $0 tax.
  • Result: Bigger deduction for you, more money for the charity.

5. Warning: The “Car Donation” Trap

The radio ads are misleading.

⛔ Gross Proceeds Rule

You cannot just deduct the “Blue Book Value” of your old car.

  • The Rule: If the charity sells your car (which they usually do at auction), your deduction is limited to the actual sale price (Gross Proceeds).
  • Example: Blue Book says $4,000. Charity sells it for $500 at auction. Your deduction is $500.
  • Exception: If the charity uses the car (e.g., delivers meals), you can deduct Fair Market Value.

6. Frequently Asked Questions

Is my time deductible?
No. You cannot deduct the value of your time or services (e.g., a lawyer doing pro bono work). You CAN deduct out-of-pocket expenses (mileage, uniforms) related to volunteering.
What about GoFundMe?
Generally, no. Donations to individuals (even for medical bills or tragedy) are considered “gifts” and are not tax-deductible. To be deductible, the recipient must be a registered 501(c)(3) organization.