What Is an In-Kind Donation? IRS Rules, FMV, and Deductions

An in-kind donation is a non-cash contribution of goods, property, or securities to a qualified tax-exempt organization. If you itemize, in-kind donations are generally deductible at the property’s fair market value, but the IRS applies stricter rules to valuing, documenting, and reporting them than it does to cash gifts, and missing a step can cost you the deduction or trigger a penalty.

What Counts as an In-Kind Donation

The most common in-kind gifts are tangible personal property: office equipment, building supplies, food, clothing, artwork, and similar items. Publicly traded stocks, bonds, and mutual fund shares also qualify and carry some of the most favorable tax treatment available. Real estate, vehicles, boats, and airplanes count too, each with its own reporting requirements. Businesses sometimes donate the use of facilities, such as letting a nonprofit operate out of warehouse space at no charge.

Before donating, confirm the recipient is actually a qualified organization. Not every nonprofit is eligible to receive tax-deductible contributions. The IRS runs a free Tax Exempt Organization Search that lets you check 501(c)(3) status and confirm the group appears in the Publication 78 database.¹ Contributions to political campaigns, political action committees, and individuals are never deductible.

What You Cannot Deduct

The biggest misconception about in-kind giving is that donated services count. They don’t. The IRS is explicit that the value of your time or services is not a deductible charitable contribution, even when a professional would normally charge hundreds of dollars per hour for the same work.² An attorney who drafts a nonprofit’s bylaws for free gets no deduction for that legal work. A CPA who donates audit services gets nothing for the hours spent. Nonprofits may still record donated professional services on their own financial statements, but that accounting entry has nothing to do with the donor’s return.

Clothing and household items must be in good used condition or better to qualify at all. Worn-out, stained, or broken items aren’t deductible. The one exception: if a single item is worth more than $500, you can deduct it regardless of condition, but only with a qualified appraisal and a completed Section B of Form 8283.²

Determining Fair Market Value

Fair market value is the price a willing buyer and a willing seller would agree on in an open market, with neither under pressure to complete the deal. Simple in theory, tricky in practice. The IRS expects you to follow the methods in Publication 561, which walks through valuation approaches by property type.³ What you originally paid is not fair market value, and neither is the replacement cost of the item new.

For everyday items like furniture, appliances, and electronics, fair market value is what buyers actually pay at thrift stores, consignment shops, or online resale markets for comparable items in similar condition. Formulas that take original cost minus a fixed depreciation percentage don’t hold up, because many used items have little or no resale value regardless of what they cost when new.

Publicly Traded Securities

Stocks, bonds, and mutual fund shares traded on a public exchange have the cleanest valuation rule. Fair market value is the average of the highest and lowest selling prices on the date you donate the shares.⁴ Donating appreciated stock you have held for more than a year is one of the most tax-efficient charitable strategies available: you deduct the full fair market value and avoid paying capital gains tax on the appreciation.

Vehicles, Boats, and Airplanes

Vehicle donations get special scrutiny. If the charity simply resells your car, your deduction is limited to the gross sale proceeds, not the blue book value. The charity must send you a Form 1098-C within 30 days of the sale showing the actual sale price. You can only claim full fair market value when the charity makes significant use of the vehicle, performs material improvements beyond cleaning or a paint job, or gives it to a low-income individual at a below-market price as part of its charitable mission.⁵

For any vehicle with a claimed value above $500, the charity must file Form 1098-C with the IRS and give you a copy. Without that acknowledgment, your deduction is capped at $500.⁶

Documentation by Donation Size

Paperwork scales with the value of the gift. Small donations need very little; large ones require professional appraisals and specific signatures, and missing a step at the higher thresholds can wipe out the deduction entirely.

Under $250

Keep a receipt or written record from the charity showing its name, the date, the location, and a description of the property. For items dropped off without a receipt, contemporaneous personal records can suffice, but a charity receipt is stronger.

$250 or More

Get a written acknowledgment from the charity before you file. It must include the organization’s name, a description of the property (the charity does not have to state a value), and a statement about whether you received any goods or services in return. If you did, the acknowledgment must give a good-faith estimate of their value.⁷

Over $500

File Form 8283 (Section A) with your return. The form asks for details on each item or group of similar items worth more than $500: how you acquired it, when, your cost basis, and the claimed fair market value.⁸

Over $5,000

Section B of Form 8283 applies. You need a qualified appraisal from a qualified appraiser who either holds a recognized designation from a professional appraisal organization or meets minimum education requirements plus at least two years of experience valuing that type of property.⁸ The appraisal must be dated 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.³ The appraiser signs Part III of Section B, and the receiving charity signs Part V. Both signatures are required. An outdated appraisal or a missing signature can void the entire deduction.

Over $500,000

Attach the full qualified appraisal to your return, not just a reference on Form 8283. Failing to attach it generally results in disallowance.⁹

When You Receive Something in Return

If the charity gives you something back, only the amount exceeding the value of what you received is deductible. These are called quid pro quo contributions. Donate $100 worth of goods to a charity gala and receive a $40 dinner, and your deductible amount is $60.¹⁰

When a donor’s payment exceeds $75, the charity is legally required to provide a written disclosure estimating the fair market value of the benefit and stating that only the excess is deductible.¹⁰

Reporting on Your Return and AGI Limits

To deduct in-kind donations, you have to itemize on Schedule A of Form 1040. For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.¹¹ If your total itemized deductions fall below those amounts, your donation still helps the charity but does nothing for your tax bill. An above-the-line deduction for non-itemizers is available starting in 2026 for cash contributions, but it does not apply to non-cash gifts.

Attach Form 8283 for any year your non-cash donations total more than $500. Tax software handles this as a PDF attachment during e-filing; paper filers include the form with the return. For donations over $500,000, the full appraisal must accompany the return too.⁸

Even if you clear the itemization hurdle, you can’t necessarily deduct the entire value in one year. The tax code caps the charitable deduction as a percentage of adjusted gross income, and the limit depends on what you gave and who received it:

50% of AGI for most non-cash contributions to public charities like churches, schools, hospitals, and organizations receiving broad public support.
30% of AGI for capital gain property (such as appreciated stock held over a year) donated to public charities, and for most contributions to private foundations.
20% of AGI for capital gain property donated to private foundations.

Amounts above the applicable limit carry forward for up to five succeeding tax years, applied first-in, first-out. Anything still unused after five years is lost permanently.¹²

Penalties for Overvaluing Donations

Inflating the value of a donated item is one of the fastest ways to trigger an IRS penalty. Claim a value that is 150% or more of what the item is actually worth and you face a 20% accuracy-related penalty on the resulting tax underpayment. Hit 200% or more, and the penalty jumps to 40%.¹³ Those penalties stack on top of the additional tax you owe once the deduction is corrected.

A qualified appraisal is your best defense at the higher tiers, but the appraisal has to be defensible. An appraiser who routinely inflates values faces separate penalties and can lose qualified status. On items above the $5,000 threshold, a few hundred dollars for a credible appraisal is cheap insurance against a disallowed deduction and a 20% or 40% penalty stacked on top.

How Long to Keep the Records

Keep records supporting any item on your return until the statute of limitations for that return expires, generally three years from the filing date. If you file a claim for a loss from worthless securities or a bad debt, the period extends to seven years.¹⁴ For larger in-kind donations where valuation could be questioned, holding receipts, acknowledgment letters, appraisals, and photographs of the donated property for at least seven years is the safer approach.

1
Internal Revenue Service. Tax Exempt Organization Search
2
Internal Revenue Service. Publication 526 (2025), Charitable Contributions
3
Internal Revenue Service. Publication 561 (12/2025), Determining the Value of Donated Property
4
eCFR. 26 CFR 20.2031-2 – Valuation of Stocks and Bonds
5
Internal Revenue Service. IRS Guidance Explains Rules for Vehicle Donations
6
Internal Revenue Service. Instructions for Form 1098-C
7
Internal Revenue Service. Charitable Contributions: Written Acknowledgments
8
Internal Revenue Service. Instructions for Form 8283 (Rev. December 2025)
9
Internal Revenue Service. Instructions for Form 8283
10
Internal Revenue Service. Charitable Contributions: Quid Pro Quo Contributions
11
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
12
Office of the Law Revision Counsel. 26 U.S. Code 170 – Charitable, Etc., Contributions and Gifts
13
Office of the Law Revision Counsel. 26 U.S. Code 6662 – Imposition of Accuracy-Related Penalty
14
Internal Revenue Service. How Long Should I Keep Records?