What Is an In-Kind Donation: Deduction Limits and Documentation

An in-kind donation tax deduction lets you write off the fair market value of property, not cash, that you give to a qualified charity, provided you itemize on Schedule A. Itemizing only helps if your total deductions beat the standard deduction, which is $16,100 for single filers and $32,200 for married couples filing jointly in 2026.¹ From there, how much you can actually deduct depends on what you gave, how long you owned it, who received it, and what they do with it.

What Property Qualifies

Non-cash contributions cover a wide range: publicly traded stock, real estate, business equipment, vehicles, artwork, jewelry, furniture, clothing, and cryptocurrency. Section 170 authorizes a deduction for any charitable contribution of property made to a qualified organization during the tax year.²

One boundary trips up a lot of donors: your time and professional services are never deductible. Forty hours of pro bono legal work for a nonprofit produces no deduction, no matter what your hourly rate is. Unreimbursed out-of-pocket costs while volunteering, like supplies you buy or miles you drive for the charity, are a separate matter and can be deducted.

Which Charities Qualify

Section 170(c) restricts the deduction to specific recipients: religious organizations, nonprofits organized for charitable, scientific, literary, or educational purposes, veterans’ groups, and government entities receiving the gift for a public purpose.² Gifts to individuals, political organizations, and candidates for office are not deductible even when the cause feels charitable. The IRS Tax Exempt Organization Search on irs.gov confirms whether a specific group qualifies.

How Much You Can Deduct

The deduction amount turns on the type of property and, for some gifts, what the charity does with it.

Ordinary Income Property vs. Capital Gain Property

The IRS splits donated property into two categories based on what kind of gain a sale would have produced. Ordinary income property is anything that would have generated ordinary income rather than long-term capital gain: inventory, stock held one year or less, and artwork made by the donor. The deduction for ordinary income property is capped at your cost basis, not the market value.³

Capital gain property is anything you held more than a year that would have produced a long-term capital gain if sold. Appreciated stock, long-held real estate, and collectibles fit here. Donate capital gain property to a public charity and you can generally deduct the full fair market value, appreciation included, without ever paying capital gains tax on the growth.³

The Related Use Rule

For tangible personal property like art, equipment, or furniture, what the charity does with the gift changes your deduction. If the use is connected to the charity’s exempt mission, say a painting donated to an art museum for display, you deduct fair market value. If the charity plans to sell the item or use it for something unrelated to its mission, your deduction drops to cost basis. Section 170(e)(1)(B) forces the reduction whenever the use is unrelated or the charity sells the property before year-end without certifying an exempt use.³ The rule applies only to tangible personal property, not to publicly traded stock or other intangibles.

AGI Percentage Limits

Even a properly valued gift is capped by your adjusted gross income. Section 170(b)(1) sets separate ceilings depending on the combination of property and recipient:²

60% of AGI for cash contributions to public charities.
50% of AGI for non-cash contributions of ordinary income property to public charities.
30% of AGI for capital gain property given to public charities, which is the ceiling that catches most appreciated stock and real estate gifts.
20% of AGI for capital gain property given to private foundations (other than certain private operating foundations).

Amounts you can’t use in the donation year carry forward for up to five additional tax years. Carryforwards must be used oldest first, and they stay subject to the same percentage limit that applied in the original year.³ Anything still unused after five years is lost.

Setting the Fair Market Value

Fair market value is the price the property would fetch between a willing buyer and willing seller, each with reasonable knowledge and neither under pressure to act.⁴ The value has to reflect the property’s condition on the donation date, not what you paid or what it might be worth later.

Method depends on the asset:

Publicly traded securities: the average of the highest and lowest quoted selling prices on the donation date. If the stock traded between $9 and $11, FMV is $10 per share.⁴
Real estate: a professional appraisal using comparable sales, income analysis, or replacement cost.
Used clothing and household goods: what buyers actually pay in thrift or consignment shops, not original retail. The IRS warns that used household items are usually worth far less than what you paid new.⁴
Vehicles: private-party sale values from established pricing guides, not dealer retail.

Rules for Specific Kinds of Gifts

Clothing and Household Items

Donated clothing and household goods must be in good used condition or better. Items that fail the standard get no deduction at all.⁵ The one workaround: if you claim more than $500 for a single item that isn’t in good condition, you can still deduct it, but only with a qualified appraisal attached to your return. Household items include furniture, appliances, electronics, and linens. Paintings, antiques, jewelry, gems, and collections like stamps and coins fall under different valuation standards.⁴

Vehicles, Boats, and Airplanes

Section 170(f)(12) governs vehicle donations, and the result often surprises donors. If the charity sells your vehicle without making significant use of it or materially improving it, your deduction is capped at the gross proceeds of that sale, not Kelley Blue Book value.³ The charity must send you Form 1098-C within 30 days of selling the vehicle, or within 30 days of the contribution if it plans to keep and use or improve the vehicle instead. You need that form to claim any deduction over $500.⁶

Publicly Traded Stock

Donating appreciated stock held more than a year is one of the most tax-efficient gifts available. You deduct full fair market value and skip the capital gains tax on the appreciation. Publicly traded securities also get an exemption from the qualified appraisal rule that otherwise applies to donations over $5,000; they go on Section A of Form 8283 rather than Section B.⁷

Cryptocurrency

The IRS treats virtual currency as property. Crypto held more than a year is deductible at fair market value on the donation date; crypto held a year or less is ordinary income property, capped at basis.⁸ Unlike publicly traded stock, cryptocurrency does not get the appraisal exemption. Claim more than $5,000 for a crypto gift and you need a qualified appraisal. A printout of the exchange spot price is not enough, and the donor pays for the appraisal.

Partial Interests

If you give a charity less than your entire interest in a piece of property, say the right to use your building rent-free while you keep ownership, no deduction is allowed unless the gift fits a narrow exception like a remainder interest in a personal residence or an undivided portion of your entire interest.⁹

Documentation Tiers

The paperwork gets stricter as the value climbs, and missing a requirement at any tier can wipe out the entire deduction.

Any Amount

Keep written records for every non-cash contribution: the organization’s name, the date, a description of the property, its fair market value, and how you arrived at that value.

$250 or More

You need a contemporaneous written acknowledgment from the charity. It has to describe the donated property (but not put a value on it), state whether the charity gave you anything back, and estimate the value of anything received in exchange.¹⁰ “Contemporaneous” means you have to hold the acknowledgment before you file the return that claims the deduction.

Over $500 in Total Non-Cash Gifts

Once your combined non-cash contributions for the year cross $500, Form 8283 gets attached to your return, and you report how you acquired each item and its cost basis.⁷

Over $5,000 Per Item or Group of Similar Items

At this level you need a qualified appraisal from a qualified appraiser. The appraisal must be dated no earlier than 60 days before the donation and finished no later than the due date, including extensions, of the return where you first claim the deduction.¹¹ The appraiser needs verifiable education and experience with the specific type of property and cannot be the donor, the charity, or anyone related to either. The charity must also sign Section B of Form 8283 to acknowledge receipt. Publicly traded securities are exempt from the appraisal requirement at any value. Vehicles, intellectual property, and certain inventory follow their own rules.

Quid Pro Quo Gifts

When you get something back for your gift, gala dinner, concert tickets, a gift basket, only the amount above the value of what you received counts. If the total payment exceeds $75, the charity has to give you a written disclosure with a good-faith estimate of what it provided.¹²

Penalties for Overvaluing

Inflated valuations carry real cost. Section 6662 sets two tiers of accuracy-related penalty:

Substantial valuation misstatement: claiming 150% or more of the correct amount triggers a penalty of 20% of the resulting tax underpayment.¹³
Gross valuation misstatement: claiming 200% or more doubles the penalty to 40% of the underpayment.¹³

The penalties only apply when the underpayment tied to the misstatement exceeds $5,000 for individuals or $10,000 for corporations. A reasonable cause defense is available for the 20% penalty if you can show good-faith reliance on a qualified appraisal. There is no disclosure exception, so flagging an aggressive valuation on your return won’t save you. The reasonable cause defense is much harder to establish for the 40% gross misstatement penalty.¹⁴ Getting the appraisal right up front costs far less than defending a stretched number later.

1
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
2
Office of the Law Revision Counsel. 26 US Code 170 – Charitable, Etc., Contributions and Gifts
3
Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts
4
Internal Revenue Service. Publication 561 – Determining the Value of Donated Property
5
Internal Revenue Service. Publication 526 – Charitable Contributions
6
Internal Revenue Service. Instructions for Form 1098-C – Contributions of Motor Vehicles, Boats, and Airplanes
7
Internal Revenue Service. IRS Form 8283 – Noncash Charitable Contributions
8
Internal Revenue Service. Frequently Asked Questions on Virtual Currency Transactions
9
eCFR. 26 CFR 1.170A-7 – Contributions Not in Trust of Partial Interests in Property
10
Internal Revenue Service. Charitable Contributions Written Acknowledgments
11
Internal Revenue Service. Instructions for Form 8283
12
Internal Revenue Service. Charitable Contributions – Quid Pro Quo Contributions
13
Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments
14
eCFR. 26 CFR 1.6662-5 – Substantial and Gross Valuation Misstatements Under Chapter 1