With the passage of the TCJA, the adjusted gross income (AGI) limit for the deductibility of cash charitable donations increased from 50 percent to 60 percent for 2018-2025. However, this increase is only for cash gifts to qualifying charities such as public charities and private operating foundations. Non-cash personal property donations are still subject to the 50 percent AGI limit. Donations to private non-operating foundations are still subject to the 30% AGI limit.
What about publicly traded stock donations? Stock donations are still subject to the 30 percent AGI limit. The benefit of not paying tax on the appreciation of stocks donated is still in effect. This means instead of paying capital gains tax on appreciated stock, the donor can give a larger donation to charity, which is a tax-efficient strategy. However, remember the benefit of the 60 percent AGI limit on other cash donations made will need to be reviewed. If any excess contribution is carried forward, it can be treated as a deductible charitable contribution in each of the five succeeding tax years.
AGI limitations for non-cash donations remain unchanged from pre-TCJA rules. To maximize the benefits of charitable donation regulation changes, it may be best to maximize the amount of cash donations to 60% qualifying charities. However, every individual’s situation is unique. In most cases, the AGI limit will not be an issue. But, when making large charitable donations of cash, stock or other personal property, consult with your SDK advisor or a member of the SDK tax team.