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

Donating appreciated securities that you have held for more than one year (long-term capital gain property) often provides superior tax advantages compared to donating cash, especially for taxpayers who itemize deductions in 2025.

### Donating Appreciated Stock (Long-Term Capital Gain Property)

When you donate appreciated stock held long-term to a public charity (a 501(c)(3) organization), you receive two distinct tax benefits:

• Deduction for Fair Market Value (FMV): You can generally deduct the full fair market value (FMV) of the stock on the date of the contribution, provided you itemize deductions.
• Avoidance of Capital Gains Tax: Critically, you completely avoid paying capital gains tax on the appreciation. If you had sold the stock yourself, the appreciation would have been taxed at long-term capital gains rates (0%, 15%, or 20% in 2025).

Example: You bought stock for USD 1,000 (cost basis) that is now worth USD 10,000. If you donate the stock, your deduction is USD 10,000, and you owe zero capital gains tax on the USD 9,000 appreciation.

### Donating Cash

If you donate cash, you receive only one benefit:

• Deduction for Amount Given: You can deduct the amount of cash donated, provided you itemize deductions.

Example: If you donate USD 10,000 in cash, your deduction is USD 10,000. However, you have already paid capital gains tax on any investments you sold to generate that cash.

### Limitations and Reporting Requirements

While donating stock is highly advantageous, there are limits:

If your deduction exceeds the AGI limit in 2025, the excess can generally be carried forward for up to five subsequent tax years.

Reporting Requirements:

• Cash: If the total cash contributions exceed USD 250, you must have written acknowledgment from the charity.
• Appreciated Stock: If the deduction exceeds USD 500, you must file Form 8283, Noncash Charitable Contributions. For donations of stock valued over USD 5,000, you must also obtain a qualified written appraisal (though this is often waived for publicly traded securities if you use IRS Form 8283 instructions).

Short-Term Gains Property: If you donate stock held for one year or less, your deduction is limited to your cost basis (what you originally paid for it), effectively negating the benefit of avoiding tax on the gain.

For comprehensive rules on substantiating noncash contributions, taxpayers should refer to IRS Publication 561.