In-Kind Donations for Nonprofits: Deduction Rules and Appraisals

In-kind donations are noncash gifts to a nonprofit, and the tax rules governing them turn on four things: what you gave, who received it, how much it was worth, and whether your paperwork matches the value you claim. If you itemize, you can generally deduct the fair market value of a noncash gift to a qualified public charity, subject to caps based on your adjusted gross income and to substantiation rules that get stricter as the dollar amount climbs. Get the valuation or the documentation wrong and the deduction disappears, sometimes with a penalty on top.

What Counts as a Noncash Contribution

Most in-kind gifts fall into a few categories, and each is treated differently at tax time.

Tangible goods: furniture, computers, food, clothing, medical supplies, and similar physical items.
Securities and intangible assets: publicly traded stocks, bonds, mutual fund shares, patents, copyrights. Long-held appreciated stock is one of the most tax-efficient assets to give, because you avoid capital gains tax and can still deduct the full market value.
Professional services from attorneys, accountants, architects, consultants, and other skilled professionals.
Use of facilities, such as letting a nonprofit occupy office space or a venue rent-free.

Two of those categories carry limits people often miss. Donated services are not deductible by the donor at all, regardless of how much billable time went in. And letting a nonprofit use property you still own does not produce a deduction either. Federal regulations treat a rent-free lease as a contribution of less than the donor’s entire interest in the property, which disqualifies it from a charitable deduction.¹

How Much You Can Deduct

If you itemize, the value of your noncash gift is deductible up to a ceiling expressed as a percentage of your adjusted gross income. The ceiling depends on the property type and the recipient.

Ordinary income property to a public charity: up to 50% of AGI. This includes inventory, property held one year or less, and other items whose sale would produce ordinary income rather than long-term capital gain.
Long-term capital gain property to a public charity: up to 30% of AGI when you deduct full fair market value. You can elect to deduct cost basis instead, which raises the ceiling to 50%.
Capital gain property to a private foundation: up to 20% of AGI.

These tiers come from the federal charitable contribution statute.² IRS Publication 526 walks through each with examples.³

Fair Market Value or Cost Basis

The type of property decides which figure you deduct. For long-term capital gain property given to a public charity—stock you bought five years ago that has tripled, for example—you generally deduct the current market value and pay no tax on the gain.

For property that would have produced ordinary income or short-term capital gain if sold, the deduction is reduced by the amount of that gain, which usually leaves you deducting cost basis rather than market value. The same reduction applies to tangible personal property when the nonprofit’s use of it is unrelated to its exempt purpose, or when the nonprofit sells the item before the end of the tax year.²

Carryover of Excess Contributions

When your noncash giving exceeds the AGI percentage cap in a given year, the excess carries forward for up to five years. The same percentage limits apply in each carryover year, current-year contributions are used before any carryover, and older carryovers are used before newer ones.²

What Changes in 2026

Starting in 2026, only charitable contributions that exceed 0.5% of your AGI are deductible if you itemize. This floor is new. For a household with $200,000 in AGI, the first $1,000 of giving no longer produces any tax benefit.

A separate above-the-line deduction lets non-itemizers write off up to $1,000 ($2,000 for joint filers) in charitable contributions, but only cash gifts qualify. Noncash donations do not. The 2026 standard deduction is $16,100 for single filers and $32,200 for joint filers, so if your total itemized deductions fall below that amount, an in-kind gift produces no federal deduction at all.⁴

Valuing What You Gave

Every noncash gift needs a fair market value, defined as the price a willing buyer would pay a willing seller when neither is under pressure and both know the relevant facts. IRS Publication 561 is the main reference across property types.⁵

For publicly traded securities, the value is the average of the high and low trading prices on the gift date. For household goods, clothing, and used equipment, the value is what similar items in similar condition actually sell for. Thrift store prices, not retail. Assigning retail values to used furniture or old electronics is the exact behavior the penalty structure exists to catch.

Unique or high-value property such as art, real estate, closely held business interests, and collectibles requires a professional appraisal. The valuation method varies with the asset: comparable sales for real estate, income approaches for business interests, expert opinion for art. Publication 561 covers each category.

Paperwork by Dollar Threshold

The documentation the IRS requires scales with the value of the gift, and thresholds apply per item or per group of similar items, not to your total noncash giving for the year.

Under $250: keep a receipt from the nonprofit showing its name, the date, the location, and a description of the property.
$250 to $500: obtain a contemporaneous written acknowledgment from the nonprofit (details below). No special IRS form.
$501 to $5,000: file Form 8283, Section A with your return. Describe the property, provide cost basis, and state the valuation method.
Over $5,000: file Form 8283, Section B, backed by a qualified appraisal. Both the appraiser and a representative of the nonprofit must sign Section B.

Some categories go in Section A regardless of value, including publicly traded securities, vehicles for which the nonprofit issues a Form 1098-C, and certain inventory.⁶⁷

Written Acknowledgment at $250 and Above

For any single noncash contribution of $250 or more, the donor needs a contemporaneous written acknowledgment from the nonprofit before claiming a deduction. The statute is absolute: no acknowledgment, no deduction.²

The acknowledgment must describe the property (without stating a dollar value), say whether the nonprofit provided any goods or services in exchange, and, if so, give a good-faith estimate of what those were worth. You need this document in hand by the earlier of the date you file your return or the return’s due date including extensions. The legal burden is on the donor to obtain it, not on the nonprofit to send it.⁸

Qualified Appraisals Above $5,000

For a gift valued above $5,000, the appraisal must be signed and dated by the appraiser no earlier than 60 days before the donation and no later than the due date, including extensions, of the return on which you first claim the deduction.⁹

The appraiser must have verifiable education and experience valuing the specific type of property being donated. That means either professional coursework in that property type plus at least two years of experience, or a recognized designation from a professional appraiser organization. A real estate appraiser cannot appraise fine art, and vice versa.⁹

Keep the appraisal and your Form 8283 copy for at least three years after filing, matching the standard IRS assessment window.¹⁰

Vehicles, Boats, and Airplanes

Donating a car, boat, or airplane worth more than $500 triggers its own reporting regime. The nonprofit files Form 1098-C with the IRS and gives you a copy.¹¹

Here is the trap. If the nonprofit sells the vehicle without materially improving it or giving it to a person in need at a below-market price, your deduction is capped at what the nonprofit actually received for it. A car you value at $8,000 that the charity auctions for $3,200 produces a $3,200 deduction. And without a completed Form 1098-C, you cannot claim any deduction above $500.

Penalties for Overvaluing a Gift

Accuracy-related penalties apply when a donor claims a noncash deduction based on an inflated value. A 20% penalty applies when the claimed value is 150% or more of the correct amount and the tax underpayment exceeds $5,000. If the claimed value is 200% or more of the correct amount at the same underpayment threshold, the penalty doubles to 40%.⁵

Penalties come on top of the additional tax owed, plus interest. A donor who claims a $30,000 deduction for property actually worth $15,000 faces the 20% penalty on the underpaid tax. Appraisers who help inflate values can face their own penalties.

Enhanced Deduction for Business Inventory

Businesses that donate inventory for the care of the ill, the needy, or infants may qualify for an enhanced deduction above their normal cost basis. The property must be used solely for that charitable purpose, the nonprofit cannot resell it, and the nonprofit must provide a written statement confirming those conditions. For food inventory specifically, the property must comply with federal food safety requirements at the time of donation and for the 180 days preceding it.¹²

The provision originally applied only to C corporations. Congress expanded it to cover S corporations, partnerships, and sole proprietors for food inventory donations, so a small business owner giving surplus food to a food pantry can often claim more than plain cost basis.

1
eCFR. 26 CFR 1.170A-7 – Contributions Not in Trust of Partial Interests in Property
2
Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts
3
Internal Revenue Service. Publication 526 – Charitable Contributions
4
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
5
Internal Revenue Service. Publication 561 – Determining the Value of Donated Property
6
Internal Revenue Service. Form 8283 – Noncash Charitable Contributions
7
Internal Revenue Service. Instructions for Form 8283 – Noncash Charitable Contributions
8
Internal Revenue Service. Publication 1771 – Charitable Contributions Substantiation and Disclosure Requirements
9
eCFR. 26 CFR 1.170A-17 – Qualified Appraisal and Qualified Appraiser
10
Internal Revenue Service. How Long Should I Keep Records?
11
Internal Revenue Service. About Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes
12
Internal Revenue Service. In-Kind Contributions