The CARES Act and charitable contributions

What you need to know about the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and philanthropy.

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on March 27, 2020. While the impact of the $2.2 trillion response bill is wide, summarized below are key provisions in the CARES Act related to charitable contributions.

$300 Above-the-Line Charitable Deduction

• A new above-the-line charitable deduction of up to $300 is available to taxpayers who do not itemize deductions.
• This deduction applies only to qualified cash contributions and does not apply to cash contributions made to donor advised funds or supporting organizations. It also does not apply to carry-over contributions.
• Currently, it’s unclear whether this deduction will be allowed beyond 2020.

Charitable Contribution Limitation

• For individual taxpayers who do itemize deductions, the CARES Act temporarily suspends the 60 percent charitable contribution deduction limitation for qualified cash contributions.
• Individual taxpayers who contribute cash to a public charity, or a limited number of private foundations, may deduct up to 100 percent of their adjusted gross income after taking into account other contributions subject to charitable contribution limitations.
• Individual taxpayers can continue to carry forward any excess charitable contributions for five years.
• Corporations may deduct charitable gifts up to 25 percent of the corporation’s taxable income (increased from 10 percent).
• This is only effective in 2020.
• This increase in limitation applies to federal income taxes and may not apply at the state level.

Waiver of Required Minimum Distributions

• Required minimum distributions (RMDs) are waived for IRAs, including inherited IRAs, and other qualified retirement plans such as 401(k) and 403(b) plans.
• RMDs are often considered in connection with gifts made to Stanford through a Qualified Charitable Distribution.
• This is only effective in 2020.

For more information about how the CARES Act may impact your specific financial situation, please consult with your tax, legal, or financial advisor(s). To speak directly with a member of the Office of Planned Giving, please contact planned.giving@stanford.edu or (650) 725-4358.

Please note that a couple of the above-described provisions were extended into 2021.