Charitable Carryovers: How 5-Year Rules Work When You Can’t Deduct It All in 2025

Many U.S. taxpayers generously donate to charities, but the IRS imposes limits on how much can be deducted in a single year. If your contributions exceed those limits, the charitable contribution carryover rules allow you to claim the unused deductions in future years—up to five years. Understanding these rules in 2025 can help you maximize tax savings and avoid losing valuable deductions.

Annual Deduction Limits in 2025

The IRS sets percentage limits on charitable contributions based on your Adjusted Gross Income (AGI):

60% of AGI: Cash donations to public charities.
30% of AGI: Donations of appreciated assets (like stocks).
20% of AGI: Certain gifts to private foundations.

Any contributions that exceed these limits can’t be deducted in 2025—but that’s where the carryover rules step in.

How the 5-Year Carryover Rule Works

If your 2025 charitable donations exceed the annual AGI limit, you may carry forward the unused portion for up to five tax years. Here’s how it works:

Unused deductions roll into the next tax year automatically.
You must use the current year’s contributions first before applying any carryover amounts.
Carryovers retain their original classification (e.g., 30% limit contributions remain 30% in future years).
Any portion not used within five years is lost permanently.

Example of Charitable Carryovers

Suppose your AGI in 2025 is $100,000 and you donate $70,000 in cash to a public charity. Since you can only deduct 60% of AGI ($60,000), the remaining $10,000 carries forward. You can deduct it in 2026 (subject to that year’s AGI limits).

Recordkeeping Requirements

To preserve your right to deduct carryovers:

Maintain IRS-approved receipts and acknowledgment letters.
Track the original year and type of each contribution.
Use Schedule A (Form 1040) to report current-year and carryover deductions.

Why It Matters for Tax Planning

Avoid losing deductions: Unused amounts expire after 5 years.
Optimize timing: Large gifts may be better spread across tax years to maximize AGI limits.
Combine with other deductions: Strategic planning helps maximize both itemized deductions and credits.

Key Takeaways for 2025

Charitable deductions are capped at 20%, 30%, or 60% of AGI depending on gift type.
Excess contributions roll forward up to five years.
Always deduct current-year contributions before carryovers.
Plan large donations strategically to avoid losing deductions.

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