How donating what you love can earn you tax deductions

Image Credits: UnsplashImage Credits: Unsplash
  • Donations to approved organizations can significantly reduce your taxable income.
  • Keep detailed records and receipts to claim your tax deductions.
  • Plan your donations strategically to maximize tax benefits.

Charitable giving is a noble act that benefits society and can also provide substantial tax benefits. By understanding the intricacies of tax deductions for donations, you can maximize your tax savings while supporting causes you care about. This article delves into the art of donating what you love and getting a tax deduction, offering insights and practical examples to help you navigate the process.

A tax deduction reduces your taxable income, thereby lowering the amount of tax you owe. In Malaysia, donations to approved organizations can qualify for tax deductions, provided they meet specific criteria set by the Inland Revenue Board of Malaysia (LHDN). These deductions are applied to your aggregate income, which includes all taxable income from employment, rent, and other sources.

Types of Donations Eligible for Tax Deductions

According to LHDN, the following types of donations are eligible for tax deductions:

  • Gift of money to the Government, State Government, or Local Authorities
  • Gift of money to Approved Institutions or Organizations (limited to 10% of aggregate income)
  • Gift of money or contribution in kind for any Approved Sports Activity or Sports Body (limited to 10% of aggregate income)
  • Gift of money or contribution in kind for any Approved Project of National Interest (limited to 10% of aggregate income)
  • Gift of artifacts, manuscripts, or paintings
  • Gift of money for provision of Library Facilities or to Libraries
  • Gift of money or contribution in kind for the provision of facilities in Public Places for the benefit of disabled persons
  • Gift of money or medical equipment to any healthcare facility approved by the Ministry of Health
  • Gift of paintings to the National Art Gallery or any State Art Gallery
  • Calculating Your Tax Deduction

To illustrate how tax deductions work, consider the following example:

Suppose you have an aggregate income of RM70,000 for the year. You donate RM5,000 to an approved charitable organization. Since the donation is limited to 10% of your aggregate income, you can claim a tax deduction of RM7,000 (10% of RM70,000). This reduces your taxable income to RM63,000, thereby lowering your tax liability.

Strategic Charitable Giving

To maximize your tax savings, consider the following strategies:

Donate to Approved Organizations: Ensure that your donations are made to organizations approved by LHDN. This is crucial for your contributions to qualify for tax deductions.

Keep Detailed Records: Maintain receipts and documentation for all your donations. This is essential for claiming tax deductions and for any potential audits by tax authorities.

Plan Your Donations: Consider the timing and amount of your donations. Spreading out your donations over multiple years or making larger contributions in high-income years can optimize your tax benefits.

Leverage Non-Cash Donations: Donations of artifacts, manuscripts, paintings, and other valuable items can also qualify for tax deductions. Ensure these items are donated to approved institutions.

Charitable giving is not only a way to support causes you care about but also a strategic tool for tax planning. By understanding the rules and maximizing your tax deductions, you can reduce your taxable income and enjoy significant tax savings. Remember to donate to approved organizations, keep detailed records, and plan your contributions wisely to make the most of your charitable giving.


Tax United States
Image Credits: Unsplash
TaxJuly 9, 2025 at 1:30:00 PM

Here’s how Trump’s new endowment tax could impact your college tuition

The latest US tax-and-spending package signed by President Donald Trump doesn’t just touch corporate and individual tax policy—it also marks a significant shift...

Tax United States
Image Credits: Unsplash
TaxJuly 8, 2025 at 1:30:00 PM

Why it’s time to close the litigation funder tax loophole

There’s a multibillion-dollar hustle hiding in the legal system—and no, it’s not just ambulance chasers or billable-hour lawyers. It’s litigation funding, the financial...

Tax
Image Credits: Unsplash
TaxJuly 8, 2025 at 1:00:00 PM

New Social Security bonus and SALT deduction rules take effect

In the second half of 2025, the US government introduced two policy changes that don’t make front-page headlines—but should absolutely be on your...

Tax United States
Image Credits: Unsplash
TaxJuly 8, 2025 at 12:30:00 AM

Trump’s no-tax-on-tips plan sounds good—until you read the fine print

In June 2024, former President Donald Trump made a direct appeal to America’s service workers: under his future administration, tipped income would no...

Tax United States
Image Credits: Unsplash
TaxJuly 5, 2025 at 3:00:00 PM

Why new Trump tax deductions may offer little relief for low-income workers

When politicians talk about tax cuts, it often sounds like good news for everyone. But in reality, not all tax relief lands the...

Tax United States
Image Credits: Unsplash
TaxJuly 4, 2025 at 3:30:00 PM

Social Security trust fund insolvency: Will Congress fix it in time?

Social Security is the cornerstone of retirement planning for most Americans. Yet the latest trustee report warns that its primary funding source—the Old-Age...

Tax United States
Image Credits: Unsplash
TaxJuly 4, 2025 at 11:00:00 AM

How to avoid tax torpedoes in retirement

Retirement is supposed to be a time of financial ease, not surprise tax bills. Yet many retirees—especially those who’ve diligently saved—find themselves hit...

Tax United States
Image Credits: Unsplash
TaxJuly 3, 2025 at 11:00:00 AM

Why Trump’s tax deductions for tips, car loans, and overtime may offer little value to low-income earners

For working Americans hoping for meaningful tax relief, the Senate’s approval of Trump’s 2025 tax package might sound like good news. After all,...

Tax United States
Image Credits: Unsplash
TaxJuly 3, 2025 at 2:00:00 AM

Why Congress is advancing a “meh” tax bill—and why it still matters

This year’s most underwhelming piece of legislation might also be one of its most consequential. The Senate recently passed a modest tax bill...

Tax United States
Image Credits: Unsplash
TaxJuly 2, 2025 at 6:00:00 PM

Child tax credit changes: Bigger benefits, but will your family qualify?

The child tax credit (CTC) is one of the largest federal tax breaks for families in the U.S., designed to ease the financial...

Tax United States
Image Credits: Unsplash
TaxJuly 2, 2025 at 5:30:00 PM

What it means for buyers due to the EV tax credit phaseout

A major US tax and spending package advancing through Congress could permanently end federal electric vehicle (EV) tax credits by September 30, 2025—marking...

Tax United States
Image Credits: Unsplash
TaxJuly 1, 2025 at 5:30:00 PM

GOP tax bill impact by income group raises equity concerns

A major Republican-led legislative package now moving through the US Senate promises broad tax relief and fiscal reform—but for many working Americans, especially...

Load More