How do AGI limits differ in 2025 for appreciated securities donated through donor-advised funds?
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Executive summary
Donations of long‑term appreciated securities to donor‑advised funds (DAFs) are treated under the favorable IRS percentage‑of‑AGI rules that prevailed in 2025: taxpayers generally may deduct the fair‑market value of such gifts up to 30% of adjusted gross income (AGI) for the tax year, while cash gifts to public charities and DAFs carry a higher 60% of AGI ceiling [1] [2] [3]. Donating appreciated securities directly to a DAF also typically avoids recognizing capital gains, and any excess deduction above the AGI limit can generally be carried forward for up to five years according to multiple DAF sponsors and advisors [2] [4] [5].
1. How the 30% ceiling for appreciated securities actually works in 2025
For 2025, deductions for long‑term appreciated noncash property—including publicly traded securities held for more than one year—are generally limited to 30% of the donor’s AGI when the recipient is a public charity such as a donor‑advised fund sponsor [6] [7] [3]. That 30% cap applies to the charitable deduction measured by the fair‑market value of the security, not the donor’s cost basis, provided the asset qualifies as long‑term capital gain property [2] [8]. If a donor’s contribution of appreciated securities in a single year exceeds the 30% ceiling, the unused deduction may be carried forward subject to the standard five‑year carryforward rule cited by DAF sponsors and tax advisors [4] [5].
2. Why DAFs are treated like public charities and why it matters
Donor‑advised funds are sponsored by 501(c) public charities, and because contributions to a DAF are treated as gifts to a public charity, they qualify for the more favorable public‑charity deduction limits—most notably the 30% cap for appreciated securities and the 60% cap for cash—rather than the typically lower private foundation limits [2] [9] [8]. This public‑charity classification is central to the tax advantage: donors avoid capital gains on an in‑kind transfer of appreciated securities and can claim an immediate deduction capped at the public‑charity percentage limits even if the DAF distributes grants later [2] [7].
3. Cash vs. securities: the key difference in percentage limits
The contrast is stark in 2025: cash gifts to public charities and DAFs are generally deductible up to 60% of AGI, while appreciated securities are limited to 30% [1] [10] [3]. Several DAF sponsors and wealth advisors emphasize using appreciated securities to maximize philanthropic impact because the donor can deduct fair market value up to the 30% threshold and avoid capital gains tax that would reduce proceeds if the donor sold the stock first [2] [7] [5].
4. Private foundations and other exceptions that change the math
If the recipient is a private foundation rather than a public charity or DAF, the percentage limits are typically lower—commonly 20% of AGI for long‑term appreciated assets and 30% for cash to private foundations—so selecting a DAF as the recipient materially alters the deductible ceiling [8] [7]. Additional technical limits and recordkeeping rules (for example, Form 8283 for non‑cash gifts over $500) and nuances for short‑term holdings or restricted securities can further affect the allowable deduction and are highlighted by DAF sponsors and tax advisors [3] [8].
5. Practical takeaways and remaining caveats in reporting
DAF sponsors, investment firms, and advisors repeatedly state the same baseline: in 2025 donors receive a fair‑market‑value deduction for long‑held appreciated securities to DAFs up to 30% of AGI, cash deductions up to 60% of AGI, avoidance of capital gains on in‑kind gifts, and a five‑year carryforward for excess amounts [2] [4] [10]. The primary caveat is that these summaries are those of DAF sponsors and advisors—Publication 526 and IRS guidance define the legal framework, and taxpayers should consult their advisors for specific circumstances; the sources provided here do not include a verbatim IRS regulation text in the snippets, so this report refrains from asserting any changes to law beyond what the DAF sponsors and tax summaries state [9] [1].