There is a new financial incentive for Americans to give generously to qualifying charities, including United Way of Central New Mexico. The final $2 trillion COVID-19 stimulus package (CARES ACT) provides additional tax benefits for charitable giving starting with the 2020 tax year.
The measure increases the standard deduction for up to $300 ($600 for married couples filing jointly) in charitable donations in 2020 and beyond. Effectively you can deduct $300 of charitable gifts even if you do not itemize. Your caring gifts in support of qualifying charities providing critical services to the central New Mexico community during this health and economic crisis can now earn you tax benefits.
Here is the tax benefit breakdown for those taking standard deductions, itemized deductions and corporate giving:
The 2020 Standard Deduction is $12,400 for individuals and $24,800 for married couples filing jointly. Donations to qualifying charities of up to $300 ($600 for married couples filing jointly) will be added to the Standard Deduction. This change applies for 2020 and beyond.
For people who file for itemized deductions, the CARES ACT allows you to take a tax deduction of up to 100% of your Adjusted Gross Income (AGI) for contributions to qualifying charities starting in 2020. The new law temporarily lifts the limits on charitable giving from 60% of a taxpayer’s AGI to 100% for 2020.
For corporate donors, the CARES ACT allows an entity to take a tax deduction of up to 25% of their Adjusted Tax Income for contributions to qualifying charities starting in 2020. The new law temporarily lifts the limits from 10% of adjusted taxable income to 25% for 2020.