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 held securities (like stocks or mutual funds) directly to a qualified charity generally provides superior tax benefits compared to donating the equivalent cash amount in 2025. This strategy allows the donor to avoid capital gains tax entirely while potentially claiming a large deduction.

### Donating Appreciated Stock (Preferred Method)

When you donate stock that you have held for more than one year (making it long-term capital gain property) and the stock has increased in value, you receive a two-fold tax benefit:

• Avoidance of Capital Gains Tax: You completely avoid paying capital gains tax on the appreciation. If you sold the stock first, you would owe tax on the gain; by donating the stock directly, that gain is never realized for tax purposes.
• Charitable Deduction: You can generally deduct the Fair Market Value (FMV) of the stock on the date of the contribution, provided you itemize your deductions.

Limitations: The deduction for gifts of appreciated property is limited to 30% of your Adjusted Gross Income (AGI). Any excess deduction can be carried forward for up to five subsequent tax years.

### Donating Cash (Simpler Method)

If you donate cash, the tax benefit is simpler but less advantageous:

• Charitable Deduction: You deduct the amount of cash donated, provided you itemize. This deduction is limited to 60% of your AGI.
• No Capital Gains Benefit: You receive no benefit regarding capital gains tax, as cash inherently has no appreciation.

### Comparison Summary (Assuming Itemizing in 2025)

Assume you have stock purchased for USD 10,000 that is now worth USD 50,000. You are in the 24% ordinary income tax bracket and face a 15% long-term capital gains rate.

In the direct donation scenario, you save USD 6,000 in capital gains tax plus receive a larger deduction against ordinary income (USD 50,000 vs. USD 44,000 in this example).

Crucial Requirement: To claim the deduction for donated stock, you must have held the asset for more than one year, and you must obtain adequate substantiation from the charity, including the stock's FMV on the date of contribution. If the deduction exceeds USD 5,000, you must also file Form 8283.

It is important to note that these benefits only apply if you itemize deductions. If you take the standard deduction, you receive no tax benefit from either cash or stock donations.