THE CONSOLIDATED APPROPRIATIONS ACT AND CHARITABLE GIVING IN 2021

The Consolidated Appropriations Act signed into law on December 27, 2020, provides $900 billion in coronavirus relief in addition to the $1.4 trillion to fund the government. The new law extends three philanthropic provisions from the 2020 CARES Act into 2021 that may be of particular interest to individuals (and corporations) who may be considering charitable donations in tax year 2021. Highlights of those extensions are noted below and should be discussed with your professional advisors to determine their applicability to your individual tax situation.

  • 100% of AGI limit available for cash gifts to most public charities: Extended for the 2021 tax year, individuals may deduct cash gifts to public charities in an amount up to 100% of their adjusted gross income (AGI). Gifts to donor-advised funds (DAFs) or supporting organizations (SOs) are not eligible for this special election.
     
  • Non-itemizers are still eligible for a $300 charitable deduction: A deduction in taxable income continues to be available in 2021 for individuals who do not itemize their deductions. It is a deduction for cash gifts to public charities and is limited to $300 for single filers (or married couples that file separately) or for up to $600 for a married couple that files jointly. It is not available for gifts to DAFs or SOs. Note that the law restructures the deduction so that it is a reduction from taxable income rather than AGI.
     
  • Cash contributions from corporations continue at the increased 25% rate into 2021: The taxable income limit that applies to cash contributions made by corporations to charity (again, except to DAFs and SOs) remains at the increased rate of 25% for 2021. The usual 10% limit still applies to other charitable contributions by corporations, and those contributions reduce the 25% limit dollar-for-dollar. Qualified cash contributions in excess of the 25% limit can be carried forward for up to 5 years under the usual limits.

Special note: The required minimum distribution from most retirement plans is now mandatory for the 2021 tax year.

Due to the OUTPOURING OF OFFERS OF SUPPORT from MIT alumni and friends around the world, the Institute has created TWO NEW FUNDS to help with the Institute’s research and emergency outreach efforts related to Covid-19, in addition to the preexisting Student Life, Wellness and Support Fund. A SPECIAL ONLINE GIVING FORM allows individuals to contribute to any of these three funds.

For more information, contact your financial advisor or Amy Goldman, senior director of gift planning, at goldmana@mit.edu.