If you take the standard deduction, you can now deduct up to $1,000 if single and $2,000 if married and filing jointly (article). This means you can effectively increase your giving impact by up to 3X (and 6X if you have employer donation matching)
If you take the standard deduction, which is ~90% of Americans, you will now be able to deduct your donation and INCREASE your standard deduction by up to $2,000. The way tax deductions work is they remove your last taxable dollar, which usually has the highest tax applied. If you live in California and make around $100K, your last dollar has a 9.3% California income tax, 24% federal income tax, 6.2% Social Security tax, and 1.45% medicare tax, which adds up to 41%. That means if you donate $100, your tax bill will go down by $41.
There is more! You can also donate appreciated stock or assets and avoid paying capital gains tax. Let’s say you made a lucky bet on bitcoin or work for a company who’s stock increased a lot, you can donate this stock, deduct the full value of it, and avoid paying capital gains.
Let’s pretend you have a stock that has gone up 5X in value. If you sell the stock at $100, you will effectively get $77 in your pocket as you have to pay capital gains taxes on $80. This might be 15% long term capital gains, plus 9.3% California income tax, plus 3.8% (if you earn over $200K), which adds up to 28%.
If you donate the $100 of stock you will get a $41 tax rebate when you file your taxes vs keeping $77 if you just sold the stock. That is just a $36 difference. Meaning, for $36 real cost to you, you are giving a $100 donation. In other words your charitable cause receives $100 and you get $64 as a tax rebate when you file your taxes. You could effectively increase the impact of your donation dollars by 3X. Donate $300 instead of $100 and receive $192 back as a tax rebate. If you happen to work for a company that offers donation matching, (65% of fortune 500 companies have double the donation programs), that 3X impact can become 6X. Basically for a ~$108 cost to you, you can have $600 of impact!