When tax season rolls around, many charitable-minded individuals consider donating their old car instead of selling it. The pitch is everywhere: “Donate your car for a tax deduction!” But how many people actually benefit from this? At ARS we have learned there are many other reasons donors may donate that are not for tax purposes.
Itemizing vs. Taking the Standard Deduction:
To understand how car donations affect taxes, we need to talk about itemized deductions. In the U.S., taxpayers have two options:
- Take the standard deduction, which is a fixed amount based on your filing status. For the 2024 tax year, the standard deduction was as follows:
- $14,600 for single filers
- $29,200 for married filing jointly
- $21,900 for heads of household
- Itemize deductions, where you list out deductible expenses like mortgage interest, medical costs, state and local taxes, and—importantly—charitable contributions, including car donations.
Here’s the catch: you can’t deduct a car donation unless you itemize.
So How Many People Itemize Their Taxes?
According to the IRS and recent tax data:
- Roughly 87% of taxpayers take the standard deduction.
- Only 13% itemize deductions, and this percentage dropped significantly after the 2017 Tax Cuts and Jobs Act nearly doubled the standard deduction.
That means that on average only about 1 in 8 taxpayers would be able claim a deduction for a car donation.
(source: https://taxpolicycenter.org/briefing-book/what-are-itemized-deductions-and-who-claims-them)
How Car Donation Deductions Actually Work
If you itemize and donate a car to a qualified 501(c)(3) nonprofit, your deduction is generally based on the gross proceeds the vehicle sells for.
If you do itemize, here’s how your tax benefit is calculated:
- Donated vehicles are sold at auction or recyclers
- The IRS allows you to deduct the amount the vehicle sells for, not its estimated market value.
- You’ll receive a Form 1098-C, which states the sale price—that’s the number you’ll use when you file your taxes.
🔹 If the vehicle sells for less than $500:
You can deduct either the sale price or the fair market value (up to $500), whichever is higher.
🔹 If the vehicle sells for more than $500:
You’ll deduct the actual sale price listed on your 1098-C form.
Based on our own date of car donors we have SSN on file for, 18% of donors receive an IRS 1098-C form. That leaves 82% of car donors donating for other reasons than to get a tax deduction.
Should You Still Donate Your Car?
Absolutely! Car donations can fund public radio, cancer research, educational programs, Habitat builds, and more.
If your main goal is to support a cause you believe in. Donating your car:
- Helps nonprofits raise funding
- Frees up space at home
- Is usually easier than selling a car yourself
- Helps the environment
- Feels good, plain and simple
For many donors, the convenience and impact of the donation matter more than the tax benefit. Car donation is a great way to support charitable work, clean out your garage, and potentially lower your tax bill—but only if you itemize. If you don’t, you’re still doing something meaningful—you’re just not getting a tax break for it! To learn more about donating your car today, visit us here or call 877-957-2277.