Donate stock instead of cash: step-by-step

By Tom, CPA · Updated October 27, 2026

Part of: Easy Tax Strategies

TL;DR: If you itemize and give to charity, donating long-term appreciated stock lets you deduct its fair market value and never pay capital gains tax on the growth. Pick the lots with the biggest gains, transfer shares directly (never sell first), get a written acknowledgment, and file Form 8283 if the gift is over $500.

Educational only, not tax, legal, or investment advice. Examples are illustrations, not predictions. Rules and limits change; verify current figures and talk to a qualified professional about your situation.

Giving cash to charity is generous. Giving appreciated stock is generous with a side of tax judo. The charity gets the same value, you get a deduction for the full market value, and the capital gain that has been building for years simply evaporates, because tax-exempt charities do not pay tax when they sell.

This checklist walks through the steps for 2026, including the new rules from the 2025 tax law. Part of easy tax strategies; for the broader picture see charitable giving in early retirement.

CPA Warning Label: Never sell the shares and donate the cash: the sale makes the gain yours, and the tax with it.

Why stock beats cash

For a public charity, a gift of stock held more than one year is generally deductible at fair market value, and you do not recognize the gain. Compare:

Illustration: Frugal Fran itemizes, is in the 24% bracket and owes 15% on long-term gains. She wants to give $10,000. She owns index fund shares worth $10,000 with a $4,000 basis.

Giving the shares is worth $900 more. If she still wants to own the fund, she can use $10,000 of cash she would have donated to buy it back immediately, resetting her basis to $10,000. Wash sale rules apply only to losses, so there is no waiting period. The table ignores the new 2026 floor described next, which trims the deduction slightly for both options equally.

2026 rule changes

The 2025 law changed charitable deductions starting in 2026, as of October 2026 guidance:

• 0.5% floor for itemizers. Only contributions above 0.5% of your contribution base (generally AGI) are deductible. For Fran with $150,000 of AGI, the first $750 of the year's gifts does not count.
• Non-itemizer deduction. Up to $1,000 ($2,000 joint) of cash gifts is deductible without itemizing. Stock gifts do not qualify, and gifts to donor-advised funds do not count.
• Top-bracket limit. For people in the 37% bracket, the tax benefit of itemized deductions is capped, so a deduction is worth somewhat less than 37 cents per dollar.

Bottom line: stock gifts are mainly for itemizers. If you take the standard deduction, giving cash up to the non-itemizer cap may be simpler. See new charitable deduction rules.

Picking lots

• Give shares held more than one year. Short-term holdings are deductible only at basis.
• Give the lots with the largest percentage gain (lowest basis). That eliminates the most future tax per dollar given.
• Never donate shares with a loss. Sell them, take the capital loss, and donate the cash.
• Concentrated employer stock is a natural candidate; see the RSU guide. Exercised options have special rules; see ISOs vs. NSOs.

Transfer steps

1. Ask the charity for its brokerage account details (DTC number, account number, account name) and whether it wants advance notice.
2. In your brokerage, request a transfer of securities (often called a "journal" or "DTC transfer") of specific shares; specify the lots.
3. Notify the charity of the gift, with your name, the security, the number of shares and expected date. Shares often arrive without the donor's name attached.
4. Allow time: transfers can take several business days. For a December gift, start by early December; the gift counts on the date shares arrive in the charity's account.
5. Record the fair market value: for publicly traded stock, the average of the high and low prices on the date of the gift.

Receipts

• $250 or more: you need a contemporaneous written acknowledgment from the charity describing the property (not its value) and stating whether you received goods or services in return.
• Over $500 in noncash gifts: file Form 8283, Section A, for publicly traded securities.
• Publicly traded stock does not need a qualified appraisal, regardless of value.
• AGI limits: gifts of long-term appreciated property to public charities are generally limited to 30% of AGI; excess carries forward up to five years. Cash gifts to public charities can go up to 60%.

Quick checklist

1. Confirm you will itemize this year (or are bunching to do so).
2. Identify long-term lots with the lowest basis.
3. Get the charity's transfer instructions or open a donor-advised fund.
4. Initiate the transfer by early December for a same-year gift.
5. Email the charity with the details of the incoming shares.
6. Save the confirmation, the acknowledgment letter and the date-of-gift price.
7. File Form 8283 with your return if noncash gifts exceed $500.
8. Optionally, repurchase the same fund with the cash you would have donated, to reset basis higher.

DAF option

A donor-advised fund lets you give stock once, take the deduction that year, and recommend grants to charities over later years. It is ideal for:

• Bunching: stacking several years of giving into one year to exceed the standard deduction ($32,200 joint in 2026), then taking the standard deduction in off years.
• Charities that cannot accept stock: the DAF accepts shares and grants cash.
• High-income years: a bonus or a business sale year.

Remember the 0.5% floor applies each year you itemize, which slightly favors bunching. DAF gifts do not count for the non-itemizer deduction. Retirees over 70 1/2 should compare QCDs, which come from IRAs instead. More in the donor-advised fund guide.