The 2021 Consolidated Appropriations Act—the $2.3 trillion spending bill signed into law on December 27, 2020—modifies and extends several provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was signed into law on March 27, 2020. Multiple incentives were included in the CARES Act to help businesses, nonprofits, and employees whose finances have been thrown into turmoil resulting from the recent decline of economic activity. There were also several provisions in the Act that affect charitable giving.

In the 2020 CARES Act, taxpayers could take an “above-the-line,” $300 charitable giving deduction for taxpayers who do not itemize their deductions. The $300 limit applied to the tax-filing unit, so married taxpayers—those who file a joint return and do not elect to itemize deductions—could deduct a total of up to $300 in qualified charitable contributions.

With the newly passed Consolidated Appropriation Act, taxpayers who do not itemize their deductions can still deduct $300 in charitable gifts as a single person, but joint filers may now deduct up to $600. This deduction is still above-the-line and will reduce taxable income. It should be noted, though, that the Section 6662 penalty for taxpayers who overstate the deduction has increased from 20% to 50% of the underpayment.

2018 tax data indicates almost 90% of taxpayers claim the standard deduction. If you are part of the 10% who itemizes your deductions, you are still eligible for traditional giving opportunities, such as donating cash and appreciated securities. In addition to cash contributions, itemizers can also deduct the fair market value of donated property. Gifts are limited to 100% of their adjusted gross income (AGI) to charity. The limit was raised to 100% of AGI for 2021, temporarily lifting the typical 60% limitation.

Like under the CARES Act, both the above-the-line deduction and the increased limitations for charitable giving under the 2021 Consolidated Appropriation Act require the contribution to be made in cash and to a public charity or foundation described in Section 170(b)(1)(A). It does not apply to donations to a donor-advised fund.

Gifts to the Diplomacy Center Foundation in support of the National Museum of American Diplomacy at the US Department of State enable us to highlight the role of diplomacy in American history and the diplomatic community’s impactful careers in a compelling and inviting museum. While our offices are closed, we continue to fulfill our mission to create the first museum dedicated to American diplomacy. Your support is appreciated now more than ever. We hope you consider donating $300, $600, or more to help us realize this goal.

For more information about how you can contribute to the Diplomacy Center Foundation or to learn about other opportunities to support the National Museum of American Diplomacy, please contact us at [email protected].

Last updated: February 17, 2021. Please consult your financial advisor about any tax-related giving incentives.