Smart Tax Planning

Coronavirus relief bill gives you a $300 tax break for charitable donations

Key Points
  • A measure in the federal coronavirus relief bill grants taxpayers an above-the-line deduction for up to $300 in charitable donations starting in 2020.
  • Normally, you have to itemize deductions to get a tax write-off for charitable donations. In this case, the break is available to people who claim the standard deduction, which is $12,400 for singles or $24,800 for married-filing jointly in 2020.
  • The lower your tax bracket, the less of a benefit you get.
Senate Majority Leader Mitch McConnell (R-KY) speaks to reporters following the Senate Republican policy luncheon which both President Donald Trump and Vice President Mike Pence attended on March 10, 2020 in Washington, DC.
Samuel Corum | Getty Images

The federal coronavirus relief bill would allow taxpayers to nab a $300 deduction for charitable giving – and you don't even need to itemize on your 2020 tax return to get it.

The provision made it through the latest version of the bill, which has a range of measures, including a one-time payment to households and additional flexibility on retirement savings.

The House passed the $2 trillion coronavirus relief bill on Friday afternoon.

In particular, legislators are calling for a "partial above the line deduction" for charitable contributions. This means that people who take the standard deduction — which is $12,400 for singles and $24,800 for married-filing-jointly in 2020 — can still write off up to $300 in donations.

This would take effect in 2020, so you'd claim the break when you file your 2020 return next spring.

Coronavirus aid bill: Limits on buybacks for companies taking government loans
Coronavirus aid bill: Limits on buybacks for companies taking government loans

Indeed, fewer people have been taking tax breaks for their charitable donations since the tax overhaul went into effect in 2018. During the 2018 tax year, roughly 13.8 million households claimed a federal tax deduction for charitable giving, according to the IRS's analysis of returns processed through Nov. 21, 2019.

That's down from 36.8 million households claiming the charitable deduction during the 2017 tax year.

Deductions reduce your taxable income based on your federal income tax bracket. That means the higher your bracket, the greater the savings.

See below for a breakdown of income tax brackets:

"For most people, I think this $300 bonus looks like an increase in the standard deduction," said Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget. "But in the 10% tax bracket, it's only worth $30."

For someone in the 37% bracket, a $300 deduction is worth $111.   

"It maybe saves you a couple of bucks, but is it really worth the bickering between Democrats and Republicans?" asked Dan Herron, CPA and principal of Elemental Wealth Advisors in San Luis Obispo, California. He suggested that an expansion of refundable tax credits might be a more effective way to get money directly to consumers.

"You have to spend money to get a deduction," Herron said. "What do people not have right now? Money."

More from Smart Tax Planning:
What the Senate coronavirus bill means for your retirement 
How those coronavirus-fueled losses can cut your taxes
Tax Day is now July 15