Charitable contributions are part of itemized deductions. You would only itemize if your total deductions exceed the standard deduction for your filing status. Cash contributions to qualified charities are limited to 60% of your AGI.
Itemized deductions reduce your taxable income. If your AGI is 200,000, and you take the standard deduction with a married filing jointly filing status, your taxable income in tax year 2024 would be $170,800 ($29,200 standard deduction for MFJ). However, if your total itemized deductions are $50,000, this is greater than the standard deduction and your taxable income would now be $150,000, which is $20,800 less than under the standard deduction.
For married filing jointly filers, in 2024, the tax rate for income greater than $94,300 but less than $201,050 is 22%. This means a savings of $4,576 in your tax liability.
Your total tax liability does not decrease on a dollar-for-dollar basis based on the charitable contribution amount. It only decreases your taxable income. From there, the tax liability is calculated. Charitable contributions do not affect Adjusted Gross Income (AGI) or Modified Adjusted Gross Income (MAGI). They are deducted after arriving at AGI to calculate taxable income.
Charitable Contributions
What are Itemized Deductions?
What is my Tax Bracket?
@SLYKTAX
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
