I’m an American sick of being taxed by the dysfunctional US federal government and am looking for ways to reduce the amount paid as well as increase my contribution to society. I’m not looking to reduce state taxes.
How can I find out the amount I can donate to charities each year such that it reduces my federal taxes as much as possible for my income level?
If you itemize deductions, whatever you donate will reduce your taxable income by the same amount. So, if you have $50,000 in taxable income and donate $1,000, that will now become $49,000 in taxable income instead.
The 2024 tax rates for a single (not married filing jointly) individual are below. In this case, that deduction would come completely out of the 22% bracket, ie, your $1,000 in donations will reduce your tax burden by $220.
Keep in mind the standard deduction for a single individual is $14,600. You can take this instead of itemizing deductions as described above, and it works the same as if you had itemized deductions up to that value. If you have deductions less than that value, take the standard deduction; if they are greater, itemize deductions. The standard deduction for married filing jointly is $29,200.
Do note, this only covers federal taxes, your state taxes may work differently.
Doing research I think I’ve got my head around it. I’ll probably talk to a tax accountant regardless, but this information seems to be correct.