If you won't be itemizing your deductions on your 2021 federal tax return — and most taxpayers won't — be sure to take advantage of the special $300 charitable-giving deduction that Congress authorized spring 2020 in response to the pandemic.
In the not-so-distant past, charitable donations could be deducted only by taxpayers who itemized their returns — and the threshold to itemize was relatively low. But the 2017 Tax Cuts and Jobs Act substantially raised the federal income tax standard deduction. As a result, the amount of itemized deductions now falls short of the new higher standard deductions for most. The Tax Policy Center estimates that 87 percent of individual tax filers in 2019 — the latest data available — chose the standard deduction over itemizing deductions.
In 2021, however, taxpayers who claim the standard deduction also have a chance to deduct charitable donations. The Coronavirus Aid, Relief and Economic Security (CARES) Act gave taxpayers who took the standard deduction in the 2020 tax year the ability to take an above-the-line $300 federal income tax deduction for qualified charitable contributions. ("Above-the-line” means that the deduction is above line 15 on the 2019 1040 tax form, and will reduce both your adjusted gross income and your taxable income — which, in turn, reduces the amount of federal income tax you owe.)
For the 2021 tax year, the charitable deduction is even better, at least for those who file a joint return. For 2020, the charitable limit was $300 per “tax unit” — meaning that those who are married and filing jointly can only get a $300 deduction. For the 2021 tax year, however, those who are married and filing jointly can each take a $300 deduction, for a total of $600.