Automobile Charitable Contributions Sharply Decline

The IRS maintains very detailed statistics regarding various items included on tax returns. These statistics are generally released two years behind. In a recent bulletin, the IRS provided statistics relating the drop in the number of individuals claiming a deduction for donating their car to charity, as well as a substantial drop in the values claimed for the vehicles.

Congress believed that charitable contributions were being abused and has made several law changes in an effort to curtail the abuse. For 2005, a significant change was made to the deduction amount allowable for vehicle donations. In previous years, taxpayers could deduct the fair market value of the automobile. Starting in 2005, the deductible amount for most donated vehicles was changed to the lesser of the fair market value or the gross proceeds from the sale of the vehicle by the charity.

	2004	2005	Decline
Autos Donated (in thousands)	900.7	297.1	67.0%
Amount Claimed (in billions)	$2.4	$0.5	80.6%

The effects of this tax law change are clearly reflected in the data.

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