What Are the Benefits of Donating a Car?

By J.D. Wollf

  • Overview

    Is it time to get rid of your old car? Consider donating it to charity. Not only will you get the satisfaction of knowing that your car is going to a good cause, you'll also get a tax deduction. Before you start the donation process, there are a few warnings to keep in mind---but if you take care who you donate to and remember to fairly value your car, car donation should be a quick and rewarding process.
  • Charity

    One of the biggest benefits of car donation is that your contribution helps others in need. You can donate your car to a car donation program that serves as a middleman for charities. These car donation programs sell the car and then pass along some of the money to a charity. Many of these programs allow you to choose which charity will receive the proceeds. If you want to make sure that the charity receives all the sale funds, find a charity that directly receives car donations.
  • Convenience

    Another benefit of donating a car is convenience. If you sell your used car, you must clean it up, advertise it and deal with potential buyers. If you donate your car, most car donation programs will come to your house and tow your car away, whatever condition it's in. Depending on the value of the car, the time you save may actually be more valuable than the car itself.


  • Tax Deduction

    Car donation does have monetary rewards as well. If you donate the car to a 501(c)(3) tax-exempt charity, you'll be eligible for a federal income tax deduction. In most cases, the car donation program sells the car and forwards the receipt with the sale price to you. You'll then be able to deduct the amount of the sale price from your federal income taxes. If you think that your car won't bring in much sale money, don't worry: you're guaranteed a $500 deduction, even if the car sells for a lesser amount.
  • Special Circumstances

    In some cases, you can donate your car to a 501(c)(3) tax-exempt charity and use the fair market value of the vehicle as your federal tax deduction. To do this, you'll need to donate the car to a charity that will fix up your car or use the cars in its program, such as a charity that fixes up cars for needy families. The charity will send back a receipt stating that they will improve your car or use it in their work.
  • Warning

    While most car donation programs are legitimate, there are scams. Be sure to donate your car to a 501(c)(3) tax-exempt charity (see Resources for a list of eligible charities). Avoid car donation programs that want a towing fee. You should also be aware that you will have to itemize your tax reductions to take advantage of the car donation tax deduction. If you're planning to use the value of the vehicle as your tax deduction, you must use the fair market value of the car, which can be significantly different than the "blue book" value (see Resources for sites that estimate fair market value).
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