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CARES ACT: Above the Line Deduction for Charitable Contributions


On March 27, 2020, Congress passed the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. Part of the provision allows for an above-the-line deduction for charitable contributions even for individual taxpayers who do not itemize. Below please see details of the provision:


Normally, for any given tax year, the itemized charitable deduction is capped at a percentage of the individual taxpayer’s adjusted gross income (“AGI”). The percentage is determined by the donee type, as well as the type of property contributed. For the tax year 2020, an unlimited itemized deduction is available for taxpayers for charitable contributions that are traditionally limited to 50 percent of AGI.


In addition, starting in tax year 2020, even for individuals who do not itemize, up to $300 in charitable contributions can be deducted as an above-the-line deduction in calculating AGI if the charitable contributions are made to not-for-profit medical organizations, not-for-profit schools, churches, and other institutions. The contributions must be cash contributions.