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A driving motivation behind many charitable giving programs is the tax relief derived from the donor's largesse. Favorable tax treatment is available with all three of the federal taxes:

  1. Gift Tax. Gifts to charitable organizations are exempt from gift taxation.

  2. Estate Tax. Charitable contributions made by will are fully deductible to the extent the property given is first included in the donor's gross estate.

  3. Income Tax. Taxpayers who itemize are generally eligible for a tax deduction for charitable contributions when figuring their income taxes.

Income tax deductions for charitable contributions are limited to a particular percentage of their adjusted gross income (AGI). The percentage depends on whether the charitable organization is a public, semi-private, or private charity; whether the gift is to the charity or for its use; whether the contribution is cash or other property; and if the contribution is property, whether it is ordinary income, capital gain, or appreciated property.

It is beyond the scope of this course to present a detailed discussion of the tax treatment of charitable contributions. Additional information on this topic is available in the Charitable Giving Adviser's Guide (Form 2501) available from Ohio National.

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