What are the tax benefits of donating appreciated stock held long-term versus donating cash to a qualified charity in 2025?

Donating appreciated long-term capital gain property, such as stocks or mutual funds held for more than one year, often provides superior tax benefits compared to donating cash, provided you are itemizing your deductions for the 2025 tax year.

### Donating Appreciated Stock (Held Long-Term)

When you donate stock that has increased in value and that you have held for more than one year, you receive a double benefit:

• Deduction of Fair Market Value: You can generally deduct the full fair market value (FMV) of the stock on the date of the contribution. This deduction is subject to certain AGI limitations (usually 60% of your Adjusted Gross Income for public charities).
• Avoidance of Capital Gains Tax: Crucially, by donating the stock directly, you avoid realizing the capital gain. If you sold the stock first, you would owe capital gains tax on the appreciation. By donating the appreciated asset, you bypass this tax liability entirely while still claiming the deduction for the asset's full, higher value.

### Donating Cash

When you donate cash, the benefit is straightforward:

• Deduction of Amount Given: You can deduct the exact amount of cash contributed. This deduction is also subject to AGI limitations (usually 60% of AGI for public charities).
• No Capital Gains Impact: Since cash has no inherent appreciation, there is no capital gains tax to avoid.

### Comparison Summary

The key difference lies in how the appreciation is treated:

Example Scenario: Assume you have stock worth USD 10,000 with a cost basis of USD 2,000 (USD 8,000 appreciation). You are in the 15% capital gains bracket and the 24% ordinary income bracket (which determines your itemized deduction value).

• Sell & Donate: You realize USD 8,000 gain (pay USD 1,200 in capital gains tax). You deduct USD 10,000 cash donation (saving USD 2,400 in income tax, assuming 24% marginal rate). Net benefit: USD 1,200.
• Donate Stock Directly: You pay zero capital gains tax. You deduct USD 10,000 (saving USD 2,400 in income tax). Net benefit: USD 2,400.

In this simplified example, donating the appreciated stock directly saves USD 1,200 compared to selling and donating the cash proceeds.

Important Caveat: These benefits only apply if you itemize deductions. If you take the standard deduction (which is significantly higher post-TCJA), you receive no tax benefit from the contribution.

IRS Reference: Publication 526 provides the rules for deductible contributions. The rules regarding appreciated property are found under the section detailing contributions of property.