The credit cap: $1,700 per taxpayer

The law allows the credit for the total of your qualified contributions in the year, capped at $1,700 "to any taxpayer for any taxable year." Every individual filer has their own cap. Spouses filing separately each have one. The figure isn't indexed for inflation in the statute. (Source: §25F(b)(1))

If you owe $9,000 you can use all $1,700. If you owe $1,100 you use $1,100 this year and carry $600 forward. Most working households owe more than $1,700 in federal income tax and can use the full credit in year one.

The credit works against regular income tax plus any alternative minimum tax. Most other non-refundable personal credits come off first, including the child tax credit and the credit for other dependents. The adoption credit and the residential clean energy credit don't. (Source: §25F(f)(1), §26(a))

To estimate your room, look at last year's Form 1040. Line 22 is your tax after those credits. Line 24 adds other taxes, such as self-employment tax, that this credit can't reduce. If line 22 was well above $1,700 and your income hasn't dropped, you can likely use the full credit.

Unused credit is added to next year's credit and used before it. The oldest credit is used first. Nothing carries beyond the fifth year after the year of the donation, and nothing carries back. A 2027 credit can be used through your 2032 return. (Source: §25F(f))

Example. Tom owes $1,000 of federal income tax each year and donates $1,700 in both 2027 and 2028. In 2027 he uses $1,000 and carries $700. In 2028 the $700 from 2027 goes first, then $300 of his 2028 credit. He carries $1,400 into 2029.

If you're carrying credit forward, you may not need to donate the full $1,700 the next year. The statute doesn't say how a carryforward fits with the next year's $1,700 cap. Treasury hasn't said either. If you carry a large balance, ask your preparer before donating again.

The statute says $1,700 "to any taxpayer" and doesn't mention joint returns. Readings differ. One treats a joint return as one taxpayer, so one $1,700. Another gives each spouse a cap, so $3,400. Treasury's June 2026 preview of its rules didn't address it. Compare Ohio's state credit, whose statute spells out $750 per person and $1,500 per joint return. (Source: §25F(b)(1), Ohio R.C. 5747.73(B))

Until Treasury rules, plan on $1,700 per joint return and hold any second $1,700 donation. If Treasury allows two, you can donate again before December 31. If it doesn't, a second donation made in anticipation is an ordinary contribution. Couples set on two caps could consider filing separately, but separate filing usually costs more elsewhere. Ask your preparer.

You can. Up to $1,700 earns the credit. Give anything above that as a separate donation: if you claim a federal tax credit, you can't also claim a deduction from the same donation. Your tax preparer can say how to treat the separate donation. From 2026, if you don't itemize, you can deduct up to $1,000 of cash donations to eligible charities, or $2,000 on a joint return. (Source: §25F(e)) (IRS summary of the 2025 law)

Example. Maria owes $6,000 in federal income tax and donates $2,500 to CEN SGO in 2027. $1,700 comes off her tax as the credit. The other $800 is an ordinary charitable donation. She doesn't itemize, so it may count toward the non-itemizer deduction. She can't carry the $800 forward as credit, because only unused credit carries. Illustrative figures. (Source: §25F(b)(1), (f))

• Check your room. Estimate your federal income tax after other credits.
• Donate up to the cap. Above $1,700, dollars get no federal credit.
• Keep the federal donation separate from any state-credit donation.
• Donate by December 31, 2027 for the 2027 return.
• If you file jointly, plan on one cap until Treasury rules.

• Donating $3,400 expecting $1,700 now and $1,700 next year. Excess donations don't carry. Only unused credit does.
• Reading line 24 of your 1040 as your room. Line 22 is closer, since self-employment tax doesn't count.
• Forgetting the child tax credit comes off first.