Is there a cap on cash charitable contributions for married individuals filing separately with high AGI, and how is it calculated?
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Yes, there is a cap on the amount of cash charitable contributions that a married individual filing separately can deduct, and the calculation is based on a percentage of the taxpayer’s contribution base, which is generally their adjusted gross income (AGI) as defined in IRC §170(b)(1)(H) and related regulations.
1. 2025 Law: Cap on Cash Charitable Contributions for Married Filing Separately
For tax years beginning after December 31, 2025, under the One Big Beautiful Bill Act (OBBBA):
- The deduction for cash contributions to qualifying organizations is limited to 60% of the taxpayer’s contribution base (AGI), reduced by the aggregate amount of other contributions allowed under IRC §170(b)(1)(A) for the year.
- For married individuals filing separately, the cap is applied to each spouse’s separate AGI.
2. Calculation Steps
- Determine the Contribution Base:
- The contribution base is the taxpayer’s AGI for the year, computed without regard to any net operating loss carryback.
- Identify Qualifying Organizations:
- The 60% limit applies to cash contributions made “to” (not merely “for the use of”) organizations described in IRC §170(b)(1)(A), which include most public charities, churches, educational institutions, hospitals, and certain governmental units.
- Apply the 60% Limit:
- For a married individual filing separately, the maximum deduction for cash contributions to these organizations is 60% of their separate AGI, minus any other contributions allowed under §170(b)(1)(A) for the year.
- Example:
- If a married individual filing separately has AGI of $200,000, the maximum deduction for cash contributions to qualifying organizations is $120,000 (60% of $200,000), reduced by any other contributions allowed under §170(b)(1)(A).
- Carryover of Excess Contributions:
- If the taxpayer’s cash contributions exceed the 60% limit, the excess can be carried forward and treated as a charitable contribution in each of the next five years, subject to the same percentage limitations in those years.
- Other Limits May Apply:
- Non-cash contributions, contributions “for the use of” an organization, or contributions to certain private foundations are subject to lower percentage limits (generally 20% or 30% of AGI).
- If the taxpayer makes both cash and non-cash contributions, the limits are applied in a specific order, and the total deduction cannot exceed 100% of AGI.
- Special Rule for Married Filing Separately:
- Each spouse calculates their own limit based on their own AGI.
- If one spouse itemizes deductions, the other must also itemize; otherwise, neither can claim the standard deduction.
3. Summary Table (for 2025 and later)
4. Additional Notes
- The 60% limit applies only to cash contributions to qualifying organizations. Other types of contributions (e.g., property, contributions to private foundations) are subject to lower limits.
- If the taxpayer’s cash contributions exceed the limit, the excess can be carried forward for up to five years.
- The deduction is only available if the taxpayer itemizes deductions; if the standard deduction is claimed, only a limited above-the-line deduction is available (up to $1,000 for singles, $2,000 for joint filers, per OBBBA).
In summary: For married individuals filing separately, the cap on cash charitable contributions to qualifying organizations is 60% of their separate AGI, with any excess carried forward for up to five years. The deduction is only available if the taxpayer itemizes deductions.
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