327
Donate Cash vs Stock
Give the same $10,000 two ways — and see what each one really costs you after tax.
X VS Y COMPARISON · MONEY · GIVING
Donating Stock vs Cash: Which Wins?
Same $10,000.00 to the charity, two very different bills for you. Write the check and the gift costs you $7,390.00 after tax at the defaults. Hand over shares worth $10,000.00 that you bought for $2,000.00 and it costs $5,486.00 — a $1,904.00 edge, because the $8,000.00 gain is never taxed. The 2026 rules — the 30% AGI ceiling, the new 0.5% floor, the $1,000/$2,000 non-itemizer deduction — decide when the edge holds and when it flips. Run your own numbers below.
The two moves, side by side
You want to give $10,000.00 to charity. You can write a check — or you can hand over shares worth $10,000.00 that you bought for $2,000.00. Same gift to the charity, wildly different cost to you.
| Donate cash | Donate appreciated stock | |
|---|---|---|
| What the charity gets | $10,000.00 | $10,000.00 (it sells tax-free) |
| Your deduction | Up to 60% of AGI, minus the 0.5% AGI floor | Fair market value up to 30% of AGI, minus the 0.5% floor — held over 1 year |
| Capital gains tax | None — nothing to gain or lose | Skipped entirely: the $8,000.00 gain is never realized |
| Must itemize? | Yes for Schedule A — but non-itemizers get $1,000/$2,000 above-the-line in 2026 | Yes — the FMV deduction needs Schedule A |
| Net cost at the defaults | $7,390.00 | $5,486.00 — wins by $1,904.00 |
The 2026 rules that decide everything
AGI ceilings (unchanged): cash gifts to a public charity are deductible up to 60% of AGI; long-term appreciated stock up to 30% of AGI. Give more than the ceiling and the excess carries forward up to five years. The stock must be held more than one year for the fair-market-value deduction — one year or less and the deduction drops to your cost basis, which usually kills the strategy.
New for 2026 (OBBBA): itemized charitable deductions now sit above a 0.5%-of-AGI floor (at $200,000 AGI that is the first $1,000.00), and donors in the 37% bracket get deduction value capped at 35%. Non-itemizers get a brand-new above-the-line deduction of $1,000 single / $2,000 joint for cash gifts to public charities — stock gifts cannot use it.
The two layers of the stock advantage: layer one is the avoided capital-gains tax — at the defaults, $8,000.00 of gain times 15% federal plus 3.8% net investment tax plus 5% state = $1,904.00 never owed. Layer two is the deduction itself, worth $2,610.00 here. Cash gets only layer two.
The worked example: $10,000.00 at the defaults, line by line
$10,000 gift, $2,000 basis, 24% federal + 5% state, 15% LTCG, NIIT applies, $200,000 AGI, itemizing:
Cash path: deduction = min($10,000.00, 60% of $200,000) − 0.5% floor ($1,000.00) = $9,000.00; tax saved = $9,000.00 × 29% = $2,610.00; net cost $10,000.00 − $2,610.00 = $7,390.00.
Stock path: FMV deduction = min($10,000.00, 30% of $200,000) − $1,000.00 = $9,000.00; tax saved = $2,610.00; skipped gains tax = $8,000.00 × (15% + 3.8% + 5%) = $1,904.00; net cost $10,000.00 − $2,610.00 − $1,904.00 = $5,486.00.
The gap: $7,390.00 − $5,486.00 = $1,904.00 — the charity gets $10,000.00 either way, but the stock gift costs you $1,904.00 less.
Output · formula · meaning
| Output | Formula | What it means |
|---|---|---|
| Cash deduction | min(gift, 60% × AGI) − 0.5% × AGI | $9,000.00 at the defaults — what Schedule A shows. |
| Cash tax saved | deduction × (fed + state) | $2,610.00 at the defaults — layer two only. |
| Stock deduction | min(gift, 30% × AGI) − 0.5% × AGI | $9,000.00 at the defaults — fair market value. |
| Skipped gains tax | gain × (LTCG + NIIT + state) | $1,904.00 at the defaults — layer one, unique to stock. |
| Net cost of each gift | gift − tax saved (− skipped gains) | $7,390.00 cash vs $5,486.00 stock at the defaults. |
Who uses this
- Year-end givers with a brokerage account: December is when the held-over-one-year clock and the AGI ceilings decide whether the check or the shares win.
- High earners in the 37% bracket: the 2026 35% deduction-value cap trims layer two — run your numbers to see how much of the edge survives.
- Non-itemizers: the new $1,000/$2,000 above-the-line deduction is cash-only — set “Do you itemize?” to No and watch the verdict flip.
- Advisors & educators: the $1,904.00 gap at the defaults is the number that ends the “check or shares?” conversation — cite it with the block below.
Accuracy & limitations
Modeled as flat marginal rates — real brackets are progressive. The 35% top-bracket cap is applied to the federal deduction value. Assumes a public charity; gifts to private non-operating foundations face lower ceilings (30% cash / 20% property). The 0.5% floor applies per the 2026 rules. Does not model the five-year carryforward of ceiling-clipped gifts (a real benefit this understates), state-specific deduction limits, or the alternative minimum tax. For donors 70½+, a qualified charitable distribution from an IRA can beat both paths. Not tax advice.
Cite this comparisonBright Side Kit. “Donating Stock vs Cash: Which Wins?.” brightoolbox.com, 2026.
Bright Side Kit. "Donating Stock vs Cash: Which Wins?.." https://brightoolbox.com/donate-stock-vs-cash/ Accessed October 23, 2026.Frequently asked questions
Why is donating stock better than selling it and donating the cash?
Because selling first realizes the gain. On $8,000.00 of appreciation at the defaults you would owe $1,904.00 in federal, NIIT, and state tax before the charity ever sees a dollar — then your deduction is worth the same as a plain cash gift. Donating the shares directly skips the sale, so the gain is never taxed and the charity still gets the full $10,000.00.
Do I have to itemize to donate stock?
To get the fair-market-value deduction, yes — it lives on Schedule A. The 2026 law added a $1,000 single / $2,000 joint above-the-line deduction for non-itemizers, but it covers cash gifts to public charities only — stock gifts cannot use it. Set “Do you itemize?” to No in the calculator and watch the verdict flip to cash.
What if I have held the stock for less than a year?
Then the deduction is limited to your cost basis, not the market value — at the defaults that is a $1,000.00 deduction worth $290.00, and the stock path loses by $2,320.00. The fix: wait out the one-year clock if you can, or sell, harvest, and give cash instead.
What is the 0.5% AGI floor new in 2026?
Starting in 2026, itemized charitable deductions only count above 0.5% of your AGI — at $200,000 AGI the first $1,000.00 of giving produces no deduction. It trims small gifts most: a $500 gift from a $200,000 earner is entirely under the floor. The floor does not touch the skipped capital-gains tax on a stock gift.
My gift is bigger than 30% of my AGI — is the extra wasted?
No — the excess carries forward for up to five tax years, still subject to the ceiling each year it is used. At the calculator’s $25,000-AGI test, a $10,000.00 stock gift deducts $7,375.00 this year and the rest rides forward. Bunching several years of giving into one high-income year can also push you over the itemizing bar.
Should I donate stock that has lost value?
No — sell it first. Donating a loser wastes the loss: the deduction is still fair market value, but you forfeit the capital loss you could have harvested. Sell, realize the loss (it offsets gains and up to $3,000 of ordinary income a year), then donate the cash proceeds.
I am over 70½ — is there something better than both?
Often yes: a qualified charitable distribution (QCD) sends money straight from your IRA to the charity. The amount is excluded from income rather than deducted — so the 0.5% floor, the AGI ceilings, and the itemizing question all vanish, and it can satisfy required minimum distributions. For IRA owners 70½ and older, price the QCD before either path here.