Charitable Giving and the Coronavirus Response and Relief Supplemental Appropriations Act of 2021
The following is a summary of certain provisions of the $900 billion relief package known as the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (the “Act”) signed into law on December 27, 2020.
The Act extends certain charitable deduction benefits passed under the CARES Act in March 2020 for “qualified contributions” for an additional tax year (2021), including:
1. Above-the-line (subtracted from gross income to get to adjusted gross income) charitable deduction in the amount of $300 for cash gifts made by individuals to charity.
- For couples filing jointly, the deduction is $600.
- There is one significant difference from the provision passed in the CARES Act last March – for cash gifts made in 2020, the maximum deduction for married couples filing jointly is $300 for 2020 tax returns. This was increased to $600 for 2021.
- Donor advised funds are excluded.
- A credit is a dollar for dollar reduction for tax you owe, so for every $1 you give to charity, you receive $1 savings on your federal income tax liability.
2. Deduction limit for qualified charitable contributions by individuals who itemize their taxes remains at 100% of adjusted gross income (“AGI”) instead of reverting to 60%. The ability to deduct up to 100% of your AGI applies as follows:
- To cash gifts directly to the Community Foundation’s endowment fund, or to certain funds you create at the Community Foundation including a field of interest fund or a fund designated for a nonprofit organization.
- This does not apply to cash gifts to donor-advised funds which remain subject to the 60% of AGI limitation.
- This includes gifts of property subject to existing limitations under the law, including gifts of closely held stock or long-term capital gains property. For example, you could make a gift of cash to your donor advised fund at the Community Foundation up to 60% of AGI, and supplement that cash gift with a gift of appreciated stock to your donor advised fund of up to 30% of AGI.
3. Deduction limit for corporate charitable giving remains at 25% of taxable income instead of reverting to 10%.
Note: This material was developed by Community Foundation for Southeast Michigan. It is published with the understanding that neither the publisher nor the author is engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a professional advisor should be sought.