Charitable Giving for Business Owners After 2025
How donations are deducted by entity type, why appreciated stock beats cash, the floor and cap the 2025 law added for 2026, and the vehicles that fit a business sale.
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
Charitable contributions by a pass-through business flow to the owners' personal returns and are deducted on Schedule A; a C corporation deducts them itself, up to 10 percent of taxable income. Appreciated stock avoids capital gains tax and deducts at full value. From 2026, itemized gifts face a 0.5 percent-of-AGI floor and a reduced benefit for top-bracket donors.
On this page
How does entity type affect the deduction?
| Donor | Where deducted | Limit |
|---|---|---|
| Sole proprietor, partner, S corporation owner | Owner's Schedule A (passed through on K-1 for entities) | 60% of adjusted gross income for cash and 30% for appreciated property given to public charities (lower for private foundations); 5-year carryforward |
| C corporation | Corporate return | 10% of taxable income, with a 1% floor from 2026; 5-year carryforward |
| Business paying a charity for advertising or sponsorship | Ordinary business expense | No charitable limit, if it is a genuine business expense |
A payment to a charity that buys something — a sponsorship with real promotional value — is a marketing expense, deductible in full by the business, not a contribution.
What changed for 2026?
- A floor. Only itemized charitable contributions above 0.5 percent of adjusted gross income are deductible; the first 0.5 percent is lost.
- A cap on the benefit. For donors in the top bracket, the tax value of itemized deductions, including charity, is limited to 35 cents per dollar rather than 37.
- A deduction for non-itemizers. Cash gifts to public charities up to $1,000 ($2,000 joint) are deductible without itemizing — but not gifts to donor-advised funds or supporting organizations.
- The 60 percent limit for cash gifts was made permanent.
Donors planning large gifts in a high-income year should model the floor and cap; bunching several years of giving into one, often through a donor-advised fund, usually still works.
Why give appreciated stock?
A donor who gives stock held more than a year to a public charity deducts its full fair market value and never pays capital gains tax on the appreciation. Selling first and giving cash would leave the donor with the gain. The same applies to private company shares, with appraisal requirements, and is a common move before a business sale — but the gift must be completed before the sale is practically certain, or the gain is taxed to the donor anyway.
What vehicles fit a business sale?
- Donor-advised fund. Contribute before the sale, deduct now, grant to charities over time. Simple and widely used.
- Charitable remainder trust. Transfer shares before the sale; the tax-exempt trust sells without paying tax itself, pays the donor an income stream for life or a term (taxed to the donor as the gain is carried out), and the remainder goes to charity. The donor deducts the present value of the remainder.
- Qualified charitable distribution. Owners age 70½ or older can give directly from an IRA, up to $111,000 for 2026 ($108,000 for 2025), which counts toward required minimum distributions once they begin and never enters income.
What substantiation is required?
A written acknowledgment from the charity for any gift of $250 or more; Form 8283 for noncash gifts over $500; and a qualified appraisal for noncash gifts over $5,000 (except publicly traded securities). Missing or defective paperwork can cost the entire deduction even when the value is not in dispute.
Frequently asked questions
Can my S corporation donate and deduct it on its return?
The donation passes through to shareholders on the K-1 and is deducted on their personal returns, reducing their stock basis by the basis of the property given.
Are gifts of inventory deductible at full value?
Generally no — the deduction is limited to cost. C corporations get an enhanced deduction for inventory used to care for the ill, the needy, or infants, and any business can claim one for qualifying food inventory.
Does volunteering time count?
No. Out-of-pocket costs and mileage at the charitable rate do.
Is a contribution to a political campaign deductible?
No. Political contributions are never deductible.
Official sources
The IRS explains: “You can claim a deduction for a contribution of $250 or more only if you have a contemporaneous written acknowledgment of your contribution from the qualified organization, or certain payroll deduction records.” — Internal Revenue Service, Publication 526 (2025), Charitable Contributions, https://www.irs.gov/publications/p526
The IRS explains: “Individuals, partnerships, and corporations file Form 8283 to report information about noncash charitable contributions when the amount of their deduction for all noncash gifts is more than $500.” — Internal Revenue Service, About Form 8283, Noncash Charitable Contributions, https://www.irs.gov/forms-pubs/about-form-8283
Next step
Fairlight Accounting handles U.S. domestic, cross-border (U.S.–Canada), and international tax returns, plus bookkeeping, payroll, and CFO advisory. Our U.S. Tax Desk models gifts against the 2026 floor and cap before a high-income year closes. See pricing or book a free fit call.
Cross-border taxes, handled in one place
U.S. and Canadian filings prepared together by our U.S. and Canadian Tax Desks.
Book a free fit call