When Your 65 Cents Is Worth a Dollar

Photo: David J. Phillip/AP

This post is inspired by the recent events plaguing Houston. If you’re feeling inspired, please consider donating to one of the organizations here.

“Tax-deductible donation.”

I’ve heard and seen that phrase used in so many places and had always glossed over it. Up until 6 years ago, the term actually meant nothing to me. That’s not because I wasn’t donating, it’s because I didn’t start itemizing my deductions until I finished my training and started making a grown-up physician income.

Now that I have a home, children, businesses, and can take multiple deductions, charitable donations can be a deductible expense. What does that mean? It doesn’t mean that if I give $100, I pay $100 less in taxes. It means that I’m able to reduce my taxable income and pay taxes on that new amount.

So in theory, if I’m in the 35% federal tax bracket, then I’m able to save what I would’ve paid taxes on that $100 (which is $35). So in actuality, I spent $65 ($100 – $35) to donate $100, hence your 65 cents is worth a dollar (referencing the title of this post). This amount will vary depending on your particular tax bracket.


In reality, it’s a bit more complicated because:

1) The government limits what percentage of your income you can deduct.

2) If you make over a certain amount, a phase-out rule for high-income individuals (based on your adjusted gross income) may come into play where the government actually limits the amount you’re able to deduct.

3) It’s possible that your deductions drop you into a lower tax bracket.

4) And plenty of other intricacies that I won’t go into here…

For further details and clarification, please consult a tax professional. However, for the purpose of this post, let’s assume none of these come into play.

Why does all of this matter to me? Well, in the end, it doesn’t really affect how much, where, and why I give. It’s definitely a nice perk though and because of it I try to keep meticulous records of how much and where I donate.

One thing I may change about the way I give is to set up a Donor Advised Fund, which is on my list of to-do’s this year.


Again, donating is something that is extremely important to our family and something that we’re quite intentional about. Donating money really comes from the heart, and I can’t help but get caught up in the enormous outpouring of love that our country is showing at the moment. The tragedy is enormous, and I hope the best for everyone dealing with it. Even though it may not be huge, I’ve decided to donate this month’s proceeds from the blog to Hurricane Harvey Disaster Relief.

If you also feel inspired, please consider donating to one of the organizations listed here.


  1. I love the charitable mission and appreciate your generosity.

    I’m something of a DAF evangelist, and certainly recommend you get one started. Be sure to do it with the stocks or funds you own in taxable with the highest percentage gains, and / or any funds you might have purchased and no longer care to hold (actively managed, high expense ratio, etc…)



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