Quick answer
Is it better to donate appreciated stock or cash?
Donate the stock if you have held it more than a year and it has gained in value. You deduct its full market value and never pay capital gains tax on the growth. Cash gives you only the deduction. On a $100,000 gift with a $20,000 basis, a top-bracket donor saves about $19,000 more by giving the shares.
Key takeaways
- 01Two benefits stack: a full market-value deduction and no capital gains tax on the gain.
- 02The stock must be held more than one year, or the deduction drops to your cost basis.
- 03Appreciated stock to a public charity or DAF is deductible up to 30% of AGI, with a five-year carryforward.
- 04Never donate a loser: sell it, harvest the loss, give the cash.
| Holding period | More than 1 year for a full market-value deduction |
|---|---|
| AGI limit (public charity or DAF) | 30% of AGI for appreciated stock |
| Carryforward | 5 years |
| 2026 floor | First 0.5% of AGI not deductible for itemizers |
| Valuation (listed stock) | Average of the day's high and low price |
| Paperwork | Charity acknowledgment from $250; Form 8283 above $500 |
The Short Answer
Why is donating appreciated stock better than donating cash?
Donating stock you have held for more than one year lets you deduct its full fair market value and never pay capital gains tax on the growth. Cash only gives you the deduction. For a top-bracket donor in 2026, giving $100,000 of stock with a $20,000 basis instead of cash saves about $19,000 more in federal tax.
This guide is the hub of our charitable-giving cluster. It covers the rules every donor needs. Then go deeper on donor-advised funds for appreciated stock, the 2026 charitable deduction limits, donating restricted or pre-IPO stock, charitable lead vs. remainder trusts, bunching charitable deductions, and our donate stock vs. cash vs. sell checklist.
"Cash gets you one tax benefit. Long-term appreciated stock gets you two: the deduction, and a capital gain that simply disappears."
The Mechanics
Where do the two tax benefits come from?
Win 1: the deduction at fair market value. Under IRC §170, a gift of long-term capital gain property to a public charity is deducted at fair market value (FMV) on the date of the gift, not at what you paid.
Win 2: the gain is never taxed. The charity is tax-exempt, so when it sells it owes nothing. You never realize the gain. That is 20% long-term capital gains tax plus the 3.8% Net Investment Income Tax for high earners (in 2026 the 20% rate starts above $613,700 of taxable income for joint filers and $545,500 for single filers, per Rev. Proc. 2025-32). See the true cost of selling appreciated stock.
| $100K gift, $20K basis, top bracket | Donate Stock | Sell, Then Donate Cash |
|---|---|---|
| Capital gains tax paid | $0 | $19,040 (23.8% x $80K) |
| Amount the charity receives | $100,000 | $80,960 |
| Deduction | $100,000 | $80,960 |
| Deduction value at 35% cap | $35,000 | $28,336 |
| Net tax result | $35,000 saved | $9,296 saved |
Run Your Numbers
How much does giving stock instead of cash save you?
Enter your position. Use 35% as the deduction rate if you are in the 37% bracket. Under OBBBA, from 2026 the value of itemized deductions is capped at 35% for top-bracket filers.
Calculator
Stock vs. cash: your tax savings
Compares giving shares directly against giving the same dollar amount in cash.
Deduction value (stock or cash)
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Extra saved by giving stock (gain tax avoided)
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Total tax benefit of the stock gift
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Illustrative only; not tax advice. Assumes shares held more than one year, a gift to a public charity or DAF, itemized deductions, and the gift fits within the 30%-of-AGI limit. Ignores the 0.5%-of-AGI floor and state tax.
Chart
Federal tax benefit of a $100K gift ($20K basis)
The One-Year Rule
What if you have held the stock less than a year?
The FMV deduction only applies to long-term capital gain property: shares held more than one year. For short-term shares, §170(e)(1)(A) cuts your deduction to your cost basis. You still avoid the gain tax, but you lose the deduction on the growth.
RSU Trap: RSU shares start a new holding period at vest. Recently vested lots are short-term, so the deduction is limited to basis. Pick lots vested more than a year ago. See how RSUs are taxed.
Give These Lots
- Shares held more than one year
- Your lowest-basis lots, where the most gain is avoided
- Publicly traded stock or ETFs (no appraisal needed)
Do Not Give These
- Shares held one year or less (deduction capped at basis)
- Shares worth less than you paid: sell them, take the loss, and give the cash
- QSBS that would qualify for the gain exclusion anyway (you would waste the exclusion)
AGI Limits
How much stock can you deduct in one year?
Gifts of appreciated stock to public charities and DAFs are deductible up to 30% of AGI. Gifts to private non-operating foundations are limited to 20% of AGI. Cash to public charities is allowed up to 60% of AGI, and OBBBA made that limit permanent. Any excess carries forward for up to five years. Full detail in the 2026 charitable deduction limits.
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Max deductible this year at $1M AGI
Where Embark fits
Giving away some shares? See what the rest could pay you.
Donate the lowest-basis lots for the deduction. Enter your ticker to price targeted income on the shares you keep.
- Donating removes shares forever; Embark keeps the position yours
- Both skip the immediate capital gains hit on contribution
- Targeted 10%+ income on the shares you do not give away
Run the numbers
Live prices · takes under a minute · no obligation
2026 Changes
What did the One Big Beautiful Bill Act change for donors?
OBBBA signed
Sets new charitable rules starting in tax year 2026.
0.5%-of-AGI floor
Itemizers can only deduct charitable gifts above 0.5% of AGI. At $1M AGI the first $5,000 of giving is not deductible.
35% cap on itemized benefit
Filers in the 37% bracket get at most about 35 cents of tax benefit per deducted dollar.
Non-itemizer deduction
$1,000 single / $2,000 joint for cash gifts to operating charities. Gifts of stock and gifts to DAFs do not qualify.
So in 2026 a smaller share of giving is deductible, and each dollar is worth a bit less at the top. That makes the avoided capital gains tax a bigger share of the total benefit. It also rewards bunching charitable deductions.
How to Give
How do you actually transfer the shares?
Get the charity's DTC instructions
Ask for the receiving broker's DTC number, account name and account number. Most large charities and every major DAF sponsor publish them.
Send a letter of authorization to your broker
Name the shares and specific lots to transfer. Choose your oldest, lowest-basis long-term lots. Do not sell; move them in kind.
Tell the charity it is coming
Electronic transfers often arrive without the donor's name. A short email with ticker and share count gets you a correct receipt.
Know your valuation date
The gift happens when the shares land in the charity's account. FMV is the average of the high and low prices that day, not the price you saw when you placed the order.
Beat the year-end deadline
The shares must reach the charity's account by December 31. Brokers get swamped in December, so start by early December.
More on transfer mechanics in DTC and in-kind transfers. Keep a written acknowledgment from the charity for any gift of $250 or more. File Form 8283 for noncash gifts over $500. Non-public stock over $5,000 also needs a qualified appraisal (publicly traded stock does not).
Keeping the Rest
What about the shares you are not giving away?
Charity is the right home for shares you were going to give away anyway. For the portion of a concentrated position you want to keep, Embark contributes the stock into an SPV as an in-kind partnership contribution under Section 721 mechanics, with $0 tax at contribution. The SPV targets 10%+ annual income while you keep the upside. Embark is a different tool with a different job. It does not give anything to charity and earns no deduction. Accredited investors only; income is targeted, not guaranteed, and contributed shares have a 3-year lock-up.
Many families pair the two: give the lowest-basis lots to a charity or DAF, and put the core holding to work. See the Embark 721 strategy and the Charitable Remainder Trust vs. Embark comparison.
FAQ
Frequently asked questions
Is it better to donate stock or cash?
If you have held the stock more than a year and it has gained in value, giving the stock is almost always better: you deduct full market value and never pay tax on the gain.
Should I donate stock that has lost value?
No. Sell it, claim the capital loss, and donate the cash. Donating it wastes the loss.
How is donated stock valued?
For publicly traded stock, FMV is the average of the high and low trading prices on the day the gift is completed.
Can I donate stock to a donor-advised fund?
Yes. DAFs accept appreciated stock, give an immediate deduction at the 30%-of-AGI limit, and let you choose charities later.
Do non-itemizers get a deduction for stock gifts in 2026?
No. The new $1,000/$2,000 non-itemizer deduction covers cash gifts only, and not gifts to DAFs.
How long do I have to hold stock before donating it?
More than one year. Stock held one year or less is deductible only at your cost basis, so the growth gives you no deduction.
When is a stock gift complete for tax purposes?
When the shares reach the charity's account, or when a properly endorsed certificate is delivered. Start transfers in early December, not on December 31.
Can I donate stock and buy the same shares back?
Yes. Wash-sale rules apply to losses on sales, not to gifts. Buying back resets your basis to today's price, which can cut future tax on the shares you keep.
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Primary sources
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Cite this article
Embark Funds Research. “Donate Appreciated Stock and Save a Fortune on Taxes This Year.” Embark Funds, updated October 15, 2026. https://www.embarkfunds.com/insights/donate-appreciated-stock-save-taxes
Not tax, legal or securities advice: This article is educational. Charitable, securities and tax rules depend on your facts and your company's policies. Work with a CPA, an estate attorney and, for insiders, securities counsel before acting. Embark income figures are targets, not guarantees, and contributed shares have a 3-year lock-up.
Charitable Giving with Appreciated Stock Series
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Keep reading
Donor-Advised Funds for Appreciated Stock
A donor-advised fund lets you give stock today, take the deduction this year, and choose charities later. Here is how the deduction, the limits, the fees and the sponsors work in 2026.
Charitable Deduction Limits for 2026: What Changed
How much you can deduct depends on what you give and who receives it. From 2026, OBBBA added a floor, a cap and a new non-itemizer deduction. Here are all the numbers in one place.
Donate Stock, Cash or Sell? The 2026 Checklist
For appreciated stock held over a year, donating the shares beats selling them and giving the cash, almost every time. Use this checklist to decide which shares to give, when cash is better, and when to keep the position working instead.
Gifting Appreciated Stock: 2026 Gift Tax Strategies
Giving low-basis stock can move wealth and future growth out of your estate, or it can hand your heirs a tax bill they would never have owed. The difference is basis. Here is how to choose what to give, to whom, and when.
Giving Some Shares Away? Put the Rest to Work.
Donate the Low-Basis Lots. Earn Income on the Core Position.
Donating stock removes shares from your life for good. For the position you intend to keep, Embark contributes it in-kind into an SPV ($0 tax at contribution, Section 721 mechanics) and targets 10%+ annual income. Accredited investors only.