I just don’t get it.
In: 3
All the answers so far seem good, but keep in mind that lowering your tax liability is not 1:1, you reduce INCOME not tax payment.
If you are taxed on 50k and you donate 5k you don’t pay 5k less in taxes, so the main reason for that giving would be to support a cause you believe in, not avoid paying taxes.
At 50k a year you’d have an effective rate of about 20%, so youd pay about 10k in taxes without any deductions. Giving 5k away puts you at 45k reported income , which would only save you about $1000 on your taxes, not 5k. You’re down 4000 over what you’d otherwise have.
For certain high net worth individuals/families charitable giving can be used as part of an overall tax strategy to reduce their liability to a lower bracket which can and some marginal cases and save considerably more, but the math still favors the government (like a casino, The House always wins).
More than anything else charitable giving is a way to support causes you believe in and/or climb social ladders.
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