What Are In-Kind Donations? Deduction Limits and Documentation

An in-kind donation is a tax deduction for giving property rather than cash to a qualified charity, and claiming it correctly means itemizing on Schedule A, valuing the property under IRS rules, respecting the annual limits tied to your adjusted gross income, and producing the paperwork the IRS requires at your donation’s dollar tier. Get any one of those wrong and the deduction shrinks or disappears entirely.

What Property Qualifies

Non-cash contributions cover both tangible items (vehicles, clothing, equipment, real estate, artwork) and intangible assets (publicly traded stock, bonds, patents, other intellectual property).¹

Two boundaries catch donors off guard. First, you cannot deduct the value of your time or services. A lawyer who donates 40 hours of pro bono work gets nothing for those hours, though out-of-pocket costs tied to volunteering (travel, materials bought for the charity) remain deductible. Second, you generally cannot deduct a gift of a partial interest in property. Donating the right to use the second floor of a building you own fails. The main exception is an undivided fractional interest, where the charity receives a percentage of your entire ownership stake.²

You Have to Itemize

Non-cash charitable gifts only reduce your taxes if you itemize on Schedule A. For the 2026 tax year, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.³ If your itemized total (charitable contributions plus mortgage interest, state and local taxes, and similar expenses) doesn’t clear that number, the standard deduction leaves you better off and your in-kind gift produces no tax benefit.

Starting in 2026, taxpayers taking the standard deduction can deduct up to $1,000 in cash gifts ($2,000 jointly). That break does not apply to property. Donors near the threshold sometimes “bunch” multiple years of giving into a single year so itemized deductions clear the standard-deduction bar.

How Much You Can Deduct Per Item

For most in-kind gifts, the deduction equals the property’s fair market value on the date of transfer. The IRS defines fair market value as the price a willing buyer and willing seller would agree on, both informed and neither forced to act.⁴ The complications start with what kind of property it is and how long you held it.

Short-Held or Ordinary Income Property

If selling the property would produce ordinary income or short-term capital gain, your deduction is FMV minus whatever portion would have been ordinary income or short-term gain. In practice, that usually caps you at your cost basis. This category includes business inventory, artwork you created, and capital assets held one year or less.¹

Example: you buy stock for $1,000 and donate it ten months later when it’s worth $1,500. The $500 gain would be short-term. Your deduction is $1,500 minus $500, or $1,000 — your original basis.

Long-Held Appreciated Property

Property that would produce a long-term capital gain if sold (held more than one year) generally qualifies for a deduction at full fair market value, without any tax on the built-in gain. Donate stock you bought for $5,000 that is now worth $20,000 after two years, and you deduct $20,000. You never pay tax on the $15,000 appreciation.¹ This is why advisors routinely steer donors toward appreciated securities over cash.

Publicly Traded Securities

For stocks and bonds traded on an established market, FMV is the average of the highest and lowest quoted selling prices on the donation date. A stock trading between $40 and $44 that day has an FMV of $42.⁴ If the market was closed, use a weighted average from the closest trading days before and after.

Used Clothing and Household Items

Clothing and household items are deductible only if they are in good used condition or better.¹ Worn shoes and broken appliances do not qualify. For items that do, value them at the prices similar goods actually fetch in thrift stores or consignment shops, not at what you paid new.

Annual Limits Based on Your AGI

Even a correctly valued gift to a qualified charity is capped at a percentage of your adjusted gross income. The ceiling depends on the property and the recipient.¹

60% of AGI: cash contributions to public charities (shown for comparison; donors often combine cash and property).
50% of AGI: non-cash contributions of ordinary income property to public charities.
30% of AGI: capital gain property deducted at full FMV to public charities, or cash and ordinary income property to private foundations.
20% of AGI: capital gain property to private foundations.

You can elect to reduce your deduction for capital gain property from FMV down to basis, which raises the applicable limit from 30% to 50%. That trade is sometimes worthwhile when the gain is small relative to basis.

Contributions that exceed the applicable limit carry forward for up to five years, keeping their original character. A 30%-limit gift carried into a later year is still subject to the 30% ceiling in that year.⁵

The Related-Use Rule for Tangible Personal Property

When you donate tangible personal property like art, collectibles, or equipment, the charity’s use of it affects your deduction. If the use is related to the charity’s exempt mission, you may deduct the full FMV (assuming the item is capital gain property). A painting donated to a museum that displays it in its galleries meets the test. If the use is unrelated — the museum sells the painting to fund operations — your deduction drops to cost basis, erasing any benefit from the appreciation.⁵

This limitation applies only to tangible personal property that is capital gain property. It does not reach real estate or intangible assets like stock. Before donating high-value tangible property, confirm in writing how the charity intends to use it.

Vehicles, Boats, and Airplanes

Vehicles, boats, and airplanes worth more than $500 follow stricter rules. If the charity sells the vehicle without making significant use of it first, your deduction is capped at the actual sale price the charity receives, not the vehicle’s FMV.⁶ Many charities auction donated vehicles quickly, and prices often disappoint.

Full FMV is available only if the charity makes significant intervening use (such as delivering meals), performs material improvements beyond basic cleaning, or gives or sells the vehicle at a deep discount to someone in need.⁶ The charity must send you Form 1098-C within 30 days of selling the vehicle, and you need that form before claiming the deduction.⁷

Documentation Rules by Dollar Amount

Paperwork is tiered by donation size, and each tier stacks on the ones below it. A missing document doesn’t shrink the deduction — it eliminates it. Courts have sided with the IRS on this point even when the donor’s valuation and property were otherwise sound.

Under $250

Keep a receipt from the charity showing its name, the date, and a description of the property. If a receipt isn’t practical (unattended drop-off bins, for instance), keep your own written records of the items, their condition, the FMV, and how you arrived at it.¹

$250 or More

For any single contribution of $250 or more, you need a contemporaneous written acknowledgment from the charity before you file your return. It must include the charity’s name, the date, a description of the property (the charity does not state a value), and whether you received anything in return.⁸ Requesting the acknowledgment is on you; charities are not required to send it on their own.

Total Non-Cash Deductions Over $500

Once your combined non-cash contributions for the year exceed $500, you must file Form 8283 (Noncash Charitable Contributions) with your return. Section A covers items or groups of similar items valued at $500 to $5,000; Section B covers items valued above $5,000.⁹

Items Over $5,000

Any single item (or group of similar items) claimed above $5,000 requires a qualified appraisal and Section B of Form 8283. The appraisal must be signed and dated no earlier than 60 days before the donation and received before your filing deadline, including extensions.⁴ The charity must also sign the donee acknowledgment section of Form 8283, Part B.

The appraiser must have verifiable education and experience valuing the specific type of property. For property other than real estate, that means relevant coursework and at least two years of experience buying, selling, or valuing the asset type. For real estate, the appraiser must be licensed or certified in the state where the property sits.¹⁰ Appraisal fees typically run several hundred dollars and are not deductible as a charitable contribution.

Publicly Traded Securities Exception

Gifts of publicly traded securities skip the appraisal requirement regardless of value. A $500,000 stock donation goes on Section A of Form 8283, not Section B, and no qualified appraisal is required.⁹ The exception covers exchange-listed securities with daily quotations, securities regularly traded over-the-counter with published quotes, and mutual fund shares quoted daily in a national newspaper.

Quid Pro Quo Reductions

If you receive something in return for your gift (a dinner, event tickets, a gift basket), the deductible amount drops by the fair market value of what you received. Give $500 of property to a gala and receive a dinner valued at $100, and your deduction is $400. For any quid pro quo contribution over $75, the charity must provide a written disclosure estimating the value of the benefit you received.¹¹

Penalties for Overvaluation

Inflated property values are a high-priority audit target. If the value you claim is 150% or more of the correct value, the IRS treats it as a substantial valuation misstatement and imposes a penalty of 20% of the resulting tax underpayment. If the claimed value reaches 400% or more of the correct amount, or the correct value is zero, the penalty doubles to 40% as a gross valuation misstatement.¹² These sit on top of the extra tax and interest.

The reasonable cause defense is narrow. For a substantial valuation misstatement, you avoid the penalty only by relying on a qualified appraisal from a qualified appraiser and making a good-faith independent investigation of value. For a gross valuation misstatement, the reasonable cause defense is not available at all.¹³ A legitimate appraisal is your primary legal shield.

Timing for Year-End Gifts

A donation counts for the tax year in which you irrevocably give up control of the property. For most tangible items, that’s the date of physical delivery. For stock certificates, timing depends on how you transfer them. A properly endorsed certificate mailed directly to the charity counts as delivered on the mailing date. Hand the certificate to your broker or the issuing company for reregistration, and the donation is not complete until the shares are transferred on the company’s books.¹

Electronic stock transfers through a brokerage are complete when the shares land in the charity’s account. Initiating the transfer on December 30 won’t help if processing takes three business days and the shares arrive in January. Start well before year-end so a processing delay doesn’t push the deduction into the next year.

Mailed checks are governed by the postmark date, but the USPS applies machine postmarks at regional processing centers, not at local post offices. Dropping a letter in a mailbox on December 31 does not guarantee a December 31 postmark. If the date matters, go to the counter for a hand-stamped postmark or use certified mail.

1
Internal Revenue Service. Publication 526 (2025), Charitable Contributions
2
eCFR. 26 CFR 1.170A-7 Contributions Not in Trust of Partial Interests in Property
3
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
4
Internal Revenue Service. Publication 561 (12/2025), Determining the Value of Donated Property
5
Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts
6
Internal Revenue Service. IRS Guidance Explains Rules for Vehicle Donations
7
Internal Revenue Service. About Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes
8
Internal Revenue Service. Charitable Contributions – Written Acknowledgments
9
Internal Revenue Service. Instructions for Form 8283 (Rev. December 2025)
10
Internal Revenue Service. Guidance Regarding Appraisal Requirements for Noncash Charitable Contributions
11
Internal Revenue Service. Charitable Organizations – Substantiation and Disclosure Requirements
12
Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments
13
Office of the Law Revision Counsel. 26 USC 6664 – Definitions and Special Rules