The short version
When you donate stock you have held longer than a year directly to a public charity, two good things happen at once. You generally deduct the full fair market value of the shares, and you never pay capital gains tax on the appreciation.
The charity, being tax-exempt, can sell the shares without tax either. Everyone except the IRS comes out ahead.
Why it beats giving cash: a simple comparison
Suppose you own stock now worth $50,000 that you bought for $10,000, held more than a year, and you are in a 20% capital gains bracket.
- If you sell first, you owe about $8,000 in capital gains tax on the $40,000 gain, leaving roughly $42,000 to give and deduct.
- If you donate the shares directly, the charity gets the full $50,000, you deduct $50,000, and the $8,000 capital gains tax never happens.
The long-term holding period is the key. The full-fair-market-value deduction applies only to assets held more than one year. If you donate stock held for a year or less, your deduction is generally limited to your cost basis, which removes most of the advantage.
How OBBBA changes the calculus in 2026
The 2026 charitable rules actually strengthen the case for gifting appreciated stock, especially when paired with bunching.
- The new 0.5% of AGI floor for itemizers applies to cash contributions. Non-cash gifts valued at fair market value, like appreciated stock, are not subject to that floor.
- Because the higher standard deduction is permanent, concentrating a large stock gift into one year, often through a donor-advised fund, helps you clear the itemizing threshold in that year.
- For top-bracket donors facing the 35% cap on deduction value, avoiding the capital gains tax entirely becomes an even larger share of the total benefit.
The AGI ceiling for appreciated property
Gifts of long-term appreciated stock to public charities are generally deductible up to 30% of your adjusted gross income, lower than the 60% ceiling that applies to cash. Anything above the limit carries forward for up to five years. For very large gifts, this ceiling can shape the timing.
Where this trips people up
Selling the stock first
The moment you sell, you trigger the capital gains tax and lose the core benefit. The shares have to move to the charity before any sale. Plan the transfer with your custodian in advance.
Donating losers instead of winners
If a stock has lost value, do not donate it. Sell it yourself to realize the deductible capital loss, then donate the cash. Only appreciated stock belongs in this strategy.
Missing the one-year mark
Short-term shares only get a basis deduction. If you are close to the one-year line, waiting until the holding period turns long-term can substantially improve the result.
Forgetting the paperwork for larger gifts
Non-cash gifts above $500 require Form 8283, and gifts of non-publicly-traded assets above $5,000 generally require a qualified appraisal. Publicly traded stock is easier, but the documentation rules still apply.
Appreciated stock questions people ask
Why donate stock instead of cash?
Donating long-term appreciated stock lets you deduct full fair market value and avoid the capital gains tax you would owe if you sold. The charity, being tax-exempt, sells it tax-free too.
Does the holding period matter?
Yes, a lot. Only stock held more than one year qualifies for the full-fair-market-value deduction. Stock held a year or less is generally deductible only at your cost basis.
Are appreciated stock gifts subject to the new 0.5% floor?
No. The 0.5% of AGI floor that OBBBA added in 2026 applies to cash contributions. Non-cash gifts valued at fair market value, like stock, are not subject to it.
How much can I deduct?
Gifts of long-term appreciated stock to public charities are generally limited to 30% of AGI, with a five-year carryforward for any excess.
What if my stock has gone down in value?
Do not donate it. Sell it yourself to capture the deductible capital loss, then donate the cash proceeds. The direct-gift strategy only helps with appreciated positions.
Keep reading
Donor-advised funds
Bundle a large stock gift into one year and grant it out over time. →
Charitable remainder trusts
For very large, concentrated positions you also want income from. →
Qualified charitable distributions
If you are 70.5 or older, an even simpler route from your IRA. →
All resources
Browse every explainer in one place. →
Holding appreciated shares you plan to give?
Giving the stock instead of selling it first is one of the cleanest wins in charitable planning, but the order of operations and the holding period have to be right. I am happy to help you time it. Here is how to start a conversation.
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Andrew Sedlacek, CPA
Founder, OGCPA
Andrew is a Certified Public Accountant and the founder of OGCPA. He built his tax career at a local Bend firm and on Deloitte's tax team before founding the firm in 2019, and began professionally as a licensed financial advisor. He focuses on equity compensation, liquidity events, and the tax side of charitable giving and wealth distribution, and serves as the tax subject-matter expert for a venture-backed AI company. He works with clients across Bend, Oregon and the San Francisco Bay Area.
This article is general information, not tax or legal advice for your specific situation. Tax outcomes depend on your individual facts, and the rules change over time. Figures cited reflect 2025 and 2026 amounts and the changes made by the One Big Beautiful Bill Act. Talk to a qualified professional (I am happy to be that person) before acting on anything here. Reading this page does not create a client relationship.