Introduction
Summary of Donating Appreciated Stock
If you've held shares for more than a year, donating them directly to charity may let you deduct their full market value and never pay capital gains tax on the growth, subject to limits based on your income level. Here's a hypothetical example. A $100,000 gift of stock with a $20,000 cost basis skips tax on $80,000 of gain. That's about $19,000 in federal tax and about $3,200 in North Carolina state tax you never pay (note capital gains treatment differs between states).
If you already give to charity and you're sitting on company stock that has grown a lot, donating stock to charity instead of cash is usually the first move I'd look at. It's also one of the few moves that lowers your taxes and your concentration risk at the same time. The deadline is real: the gift has to be complete by December 31, and brokerages and donor-advised funds may accepting transfers well before that.
Donating stock is a frequently talked about but still extremely underutilized strategy for professionals who have a portfolio with a large amount of built-in gains. It's also one of the simplest steps that charitably inclined people can take to make the most of their giving in lock-stop with their personal financial plans.
Key Terms for Donating Appreciated Stock
Five terms carry all the tax advantages of donating appreciated stock.
Cost basis. What you paid for the shares, or for RSUs, their value on the day they vested. Gain is the market value minus the basis. Company stock you've held a long time often has a very low basis.
Fair market value. What the shares are worth on the day of the gift. For publicly traded stock, that's the average of the day's high and low price. When you give shares, your deduction is generally based on the fair market value.
The more-than-one-year rule. Shares held more than a year get the full fair-market-value deduction. Shares held a year or less only get a deduction for your basis, which may remove most of the benefit. Check the acquisition date on each lot before you pick what to give.
The 30% limit and the five-year carry-forward. Gifts of appreciated stock to a public charity or donor-advised fund are deductible up to 30% of your adjusted gross income (AGI) each year. Anything above that carries forward for up to five years. In a big vest year with high income, that limit often has room.
What changed in 2026. Two new federal rules apply to everyone who itemizes:
A 0.5% floor. Only giving above 0.5% of your AGI counts. With $800,000 of AGI, the first $4,000 you give isn't deductible.
A 35% cap for the top bracket. If you're in the 37% bracket, each dollar you deduct now saves you 35 cents of federal tax, not 37.
Neither rule impacts your capital gains planning. While your deduction is limited you won't pay tax on the gain in shares you give away, and for low-basis company stock that's often the bigger number.
Giving as a Diversification Tool
Summaries about giving appreciated stock are generally focused on the tax savings. For someone with too much of one company's stock, we get have a "two birds / one stone situation with what the gift does to your portfolio.
Here's the move I walk clients through:
Give your lowest-basis company shares instead of writing a check.
Take the cash you would have donated and buy diversified investments.
The charity receives the same benefit while the portion of your portfolio in company stock shrinks. Your diversified can be invested targeting growth. You never sold a share, so you never triggered a capital gain and you've moved money out of the position you're worried about without the tax bill that usually stops people.
If you remember my D.E.L.T.A. framework for concentrated stock, this is the "Give" option as we "look through a tax-efficient lens". As a refresher:
D- Develop your family's goals
E- Evaluate your position
L- Looking through a tax-efficient lens
T- To arrive at a core portfolio that can
A- Achieve those goals more reliably.
Giving only belongs in the plan if charity is already one of your goals. If it is, it may be one of the cheapest ways to start unwinding a position.
Learn more: Read How to Manage a Concentrated Stock Position
It also pairs well with a big income year: a large vest, a bonus, or your last working year before an exit. That's when the deduction is worth the most.
Learn more: Read Golden Handcuffs and How to Plan Your Corporate Exit
Myth: "Selling and giving the cash is the same thing"
It isn't. If you sell first, you pay capital gains tax, and the charity gets what's left. If you donate the shares, the charity sells them tax-free and gets all of it.
The same hypothetical $100,000 of shares with a $20,000 basis, at top 2026 rates (Assuming your AGI limitations allow):
Sell, then donate the cash | Donate the shares | |
|---|---|---|
Capital gains tax you pay | About $22,200 | $0 |
Amount the charity receives | About $77,800 | $100,000 |
Your charitable deduction | About $77,800 | $100,000 |
To get the full $100,000 to the charity after selling, you'd have to come up with about $22,200 more of your own money. That's the real cost of the habit of writing a check.
The second misconception is about donor-advised funds. People assume that putting stock in a fund means the money has to go out to charities this year, this is also false. You get the deduction in the year you fund the account. The funds can remain invested inside the DAF for years and you can then recommend grants to your charities over as many years as you like. For donating appreciated stock, a donor-advised fund is often the simplest route. You make one transfer of shares and send the grants later.
How to donate stock to charity
The steps are actually mechanically very simple. The timing is what trips people up, so start in November, not December.
Pick where it goes. Choose a charity that accepts stock, or open a donor-advised fund if you want to give to several charities or spread grants over years.
Pick the shares. Choose lots held more than a year, with the lowest basis. Your brokerage's lot detail screen shows both.
Check your company's rules. If you're an insider, find out whether gifts need pre-clearance or have to wait for an open trading window. Additionally, research if your company provides matching gifts for charitable causes.
Get the receiving details. The charity or fund will give you its brokerage name, account number and DTC number.
Submit the transfer. Ask the brokerage holding your shares to move them "in kind." Don't sell first.
Tell the charity. Transfers often arrive without your name attached, so send a short note saying what's coming.
Keep the paperwork. You need the charity's written acknowledgment and the transfer date. For non-cash gifts over $500, you'll also file Form 8283 with your return.
If you donate appreciated stock you received through an equity plan, it may sit with the plan administrator rather than a regular brokerage. Allow extra time for that transfer.
What this looks like in a big vest year
This is a hypothetical composite, not a real client. The numbers are rounded and illustrative.
Picture a VP at a Triangle tech company. She holds $1.4 million of her company's stock, much of it from early grants with a low basis. Every year she gives about $25,000 to her church and her alma mater, always by check.
This year a large grant vests, and her AGI lands around $900,000. Instead of writing this year's checks, she:
Opens a donor-advised fund.
Gives it $125,000 of her oldest, lowest-basis shares, with about $25,000 of basis. That covers five years of her usual giving.
Recommends $25,000 a year in grants to the same two charities.
Puts the $25,000 a year she used to give into a diversified portfolio instead.
What changes:
She skips tax on about $100,000 of gain. That's roughly $23,800 federal and $4,000 North Carolina tax she never pays.
She deducts about $120,000 this year (after the 0.5% floor), in the year her income is highest. At the 35% cap, that's worth about $42,000 in federal tax.
The part of her portfolio concentrated in her company stock drops by $125,000 without a single sale. Over five years, $125,000 of new money goes into diversified investments.
Her charities don't notice any difference. Her balance sheet definitely does.
Frequently asked questions
What are the tax advantages of donating appreciated stock?
You deduct the shares' full market value, and you never pay capital gains tax on the growth. With cash, you only get the deduction. With low-basis stock, the skipped capital gains tax is often worth more than the deduction itself.
How do I donate stock to a charity?
Ask the charity or your donor-advised fund for its brokerage account details. Then have your brokerage transfer the shares "in kind," without selling them. Send the charity a note so it knows the gift came from you.
What's the deadline to donate stock this year?
The shares have to land in the charity's account by December 31. Many brokerages and donor-advised funds set their own cutoffs in mid-December, so start the transfer in November if you can.
Can I donate company stock during a blackout period?
It depends on your company's insider trading policy. Many policies require pre-clearance for gifts or limit them to open windows. Officers who file with the SEC must report gifts within two business days. Check with your legal or compliance team before you transfer.
Should I give stock directly or through a donor-advised fund?
Give directly if you're making one or two gifts to charities that accept stock easily. Use a donor-advised fund if you want to give to several charities, spread grants over years, or move shares quickly before a deadline.
What if my stock has lost value?
Don't donate it. Sell it, take the capital loss to offset other gains, and give the cash. Donate shares that have gone up.
How much stock can I deduct in one year?
Up to 30% of your adjusted gross income for appreciated stock given to a public charity or donor-advised fund. Anything over that carries forward for up to five years. Starting in 2026, giving below 0.5% of your income isn't deductible.
Do I need an appraisal to donate stock?
Not for publicly traded stock. Its value is set by the market on the day of the gift. Shares in a private company generally need a qualified appraisal once the gift is over $10,000.
Before the December cutoff
If you're holding company stock that has grown a lot and you already give, this is one of the few year-end moves that helps both your taxes and your concentration. Learn more about managing concentrated stock positions to see where giving fits in a full plan, or book a call and we'll pick the right shares before the transfer cutoffs.
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