How Charitable Contributions Can Reduce Your Taxes

Ever hear a social media guru talk about donating a million-dollar piece of art and getting a huge tax deduction? While that is technically possible, how often does the average person stumble across a masterpiece in their attic?

For the rest of us, there are practical ways to leverage charitable contributions to reduce your taxable income and you don’t need a million-dollar painting to do it.

The Basics

The IRS allows you to use charitable contributions to offset your taxable income if you itemize your deductions. What does that mean? Let’s break it down:

• If you are single and earn $150,000, donating $20,000 could reduce your taxable income to $130,000, meaning you’re only taxed on that lower amount.
• The catch is that most taxpayers historically take the standard deduction, which automatically reduces taxable income without itemizing. For 2025, the standard deduction is $15,750 for single filers and $31,500 for married couples filing jointly.

2025 Itemized Deductions Have Changed

Thanks to recent tax law changes, itemizing deductions is more beneficial than ever for many taxpayers:

• You can deduct mortgage interest on your primary residence for the first $750,000 of your mortgage.
• You can also deduct up to $40,000 in property, state, and local taxes, which is a big jump from the previous $10,000 cap.

So if you own a home and pay significant state taxes, itemizing just got a lot more valuable. Combine that with charitable contributions, and you can enjoy meaningful tax savings without needing to donate a $20,000 painting (or a $1 million one!).

Charitable Contribution Qualifications

• Must donate to a registered 501(c)(3) organization, so GoFundMe campaigns or loans to family don’t count.
• Cash donations are capped at 60% of your adjusted gross income (AGI). For example, if you earn $100,000, the maximum deductible donation in 2025 is $60,000.
• You can also donate art, furniture, or clothes to local nonprofits like Goodwill or Salvation Army, with a 30% cap of your AGI.

Many of our clients donate to their church, Goodwill, or favorite nonprofits to maximize deductions while supporting causes they care about.

The Takeaway

Charitable contributions are not just a tax strategy, they are also a way to give back to causes you love while reducing your taxable income.

Looking ahead to 2026, tax rules will shift again. Donor-advised funds can be a powerful way to plan charitable giving, allowing you to use appreciated stocks or cash to support charities over time while still claiming the deduction today. To reap the tax benefits for 2025, it’s important to act before the year is over.

Stay Connected

• Follow @WiggsCPA on social media for tax tips, LLC best practices, and invites to our upcoming webinars.
• Visit WiggsCPA.com to ask a question or schedule your consultation.

At Wiggs CPA Tax and Accounting, we help you stay organized, informed, and prepared. Thanks for reading, and we’ll see you in the next blog post!

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