How do limits differ for donations of appreciated securities in 2025?
Executive summary
Donations of long‑term appreciated securities in 2025 remain deductible at fair market value but are generally capped at 30% of your adjusted gross income (AGI) for gifts to public charities or donor‑advised funds; cash gifts carry a higher 60% AGI cap [1] [2]. Excess contributions can be carried forward up to five years under current guidance reported in 2025 [1] [3].
1. What the headline rule is — the 30% ceiling for appreciated securities
The core practical difference for 2025 is that long‑term appreciated noncash property (publicly traded securities held more than one year) is deductible up to 30% of AGI when you claim the fair market value, while cash gifts are deductible up to 60% of AGI — a split that drives most donors’ planning decisions [1] [2].
2. Why donating the security itself usually beats selling and giving the cash
Donating appreciated shares directly lets you avoid recognizing capital gains tax and still claim the full fair market value—so more goes to charity and your deduction can be larger—whereas selling first triggers capital gains tax and leaves less to donate; multiple advisers and charity guides use this comparison as the central tax‑smart rationale [4] [5] [6].
3. Where the limits differ by recipient type (public charity/DAF vs. private foundation)
The 30% limit for long‑term appreciated securities reflects the rules for public charities and donor‑advised funds; private foundations face less favorable limits (often 20% for capital gain property), which is why donor‑advised funds and public charities are frequently recommended for in‑kind gifts [7] [2].
4. Short‑term holdings and ordinary‑income property change the math
If the donated asset was held one year or less (or would generate ordinary income if sold), the deductible amount can be reduced—either limited to cost basis or adjusted for potential ordinary‑income recognition—meaning the typical long‑term FMV benefit does not apply to short‑term or ordinary‑income property [4] [8].
5. Excess gifts aren’t wasted — five‑year carryforward applies
When your appreciated‑security gifts exceed the 30% AGI limit for the year, the excess generally can be carried forward for up to five subsequent tax years, allowing you to realize the deduction over time rather than lose it [1] [3].
6. Tactical implications: mixing cash and securities to hit higher bands
Advisers note you can combine gift types to reach higher effective deduction thresholds — for example, giving securities up to the 30% cap and adding cash (deductible to 60% of AGI) if you need a larger deduction in the same year — a common optimization suggested in charitable planning literature [4] [2].
7. Administrative and anti‑abuse cautions charities and regulators emphasize
Donor‑advised funds and public charities typically have processes for accepting and liquidating securities; donors should avoid “prearranged sale” arrangements that could jeopardize tax benefits, and charities warn that in‑kind gifts can involve complex tax analysis and valuation steps [2] [5].
8. Recent and forthcoming rule changes mentioned in reporting
Some outlets note legislative changes on the horizon that could affect charitable deduction mechanics in 2026 and beyond — for example, references to policy shifts that would introduce new floors or change incentives — but the concrete 2025 limits reported in these sources remain the 30%/60% framework and the five‑year carryforward [9] [10]. Available sources do not mention a change to the 30%/60% split that takes effect in 2025 beyond these summaries.
9. Practical next steps for donors
Given the consistent guidance across brokerages, charities, and wealth managers, donors considering sizeable gifts of appreciated securities in 2025 should: confirm the holding period qualifies as long‑term, plan gifts to stay within AGI percentage limits or use carryforward, consider donating directly to a public charity or DAF to preserve the FMV deduction and avoid capital gains, and consult a tax advisor because valuation and filing particulars can affect outcomes [1] [2] [5].
Limitations: this summary relies on 2025 guidance from financial firms and charity guides in the provided sources; it does not quote the Internal Revenue Code or IRS publications directly and does not cover state tax variations or any legislative changes that were not discussed in the supplied reporting [1] [2].