I hear advisors explain this incorrectly all the time so I figured it was worth a post.

These are the deduction limits to charitable donations:

• Cash donations to public charities are generally deductible up to 60% of your AGI.

• Appreciated securities you’ve held for more than one year are generally deductible up to the lesser of:

• 30% of AGI, or
• 50% of AGI minus your deductible cash contributions.

Practically, this means:

• If donating only appreciated securities - you can generally deduct up to 30% of AGI.
• If combining cash and appreciated securities - because of the ordering rules, your current-year deduction generally tops out at 50% of AGI, with any excess typically carried forward for up to five years.

Imagine you sell your business and realize a $20 million capital gain.

You know you’ll ultimately give several million dollars to charity.

Understanding these rules helps determine:

• How much to contribute this year
• Whether to donate cash, appreciated stock, or both
• Whether you’ll need to rely on the five-year carryforward
• Whether a donor-advised fund makes sense

The new 0.5% AGI floor on charitable deductions, combined with today’s larger standard deduction, makes “bunching” multiple years of charitable giving into a donor-advised fund attractive for many families—even those without a major liquidity event.

You receive one larger deduction today while continuing to recommend grants to your favorite charities over the following years.

Charitable planning is one of my favorite areas to work through with families because a thoughtful strategy can meaningfully increase both tax efficiency and charitable impact.

If you’re looking for more than an investment manager and want comprehensive planning that incorporates tax, estate, and charitable strategies, the link to schedule a call is in my bio.