2020 CARES Act Includes Generous Tax Incentives for Charitable Giving

Do you know that the CARES Act—which was signed into law on March 27, 2020 to provide emergency financial assistance to those affected by the COVID-19 outbreak—includes significant tax incentives for those who make charitable gifts to nonprofit organizations in 2020?

For the 2020 tax year, if you make small gifts to nonprofits, you will be able to deduct up to $300 whether you itemize your taxes or take the standard deduction. Presently, only those who itemize their income tax deductions can use a charitable deduction. This “above the line” deduction can be used for contributions of cash (not stock) to qualified charitable organizations like Butterfly Pavilion.

Those who can make larger gifts will be able to deduct a much higher percentage on their 2020 taxes. Under current law, an individual may deduct up to 60% of their adjusted gross income (AGI) for charitable deductions of cash. The CARES Act lifts that restriction, so that an individual can make a gift of cash (not stock) and deduct up to 100% of their AGI for the 2020 tax year. This could allow a person to make charitable gifts that eliminate their entire tax burden. In addition, any contributions more than total AGI may be carried forward for up to five additional years, which is yet another benefit and planning tool.

Corporations also have much greater incentives to make charitable gifts this year. Usually charitable giving is limited to 10% of taxable income for the corporation. For 2020, that limit has been increased to 25% of the taxable income, making charitable gifts much more attractive to many companies.

As you consider your charitable giving this year, please consult your tax advisor.

For more information on making a charitable gift to Butterfly Pavilion please contact Janet McFarland Burlile, Vice President of Development at jmcfarlandburlile@butterflies.org or call 720-974-0453.