michele miller is considering an additional charitable contribution of $1,500 to a tax-deductible charity, bringing her total itemized deductions to $16,000. if michele is in a 24 percent tax bracket, how much will this $1,500 contribution reduce her taxes?

A person may deduct gifts of money or property made to eligible organizations for charitable purposes if they choose to itemize their deductions. A person may typically deduct up to 50% of his adjusted gross income, however in some cases, 20 or 30% limitations may be in place.

The Internal Revenue Code's section 501(c)(3) specifies that a donation can only be tax-deductible if it is donated to a tax-exempt organization. Giving to qualifying tax-exempt organizations reduces both adjusted gross income and taxable income, resulting in tax savings. People who do itemize may deduct charitable contributions given to certain charity organizations as long as certain conditions are met.

Tax reduction in dollars equals the product of the tax deduction and the tax bracket percentage.

= 4800 × 25%

= $1,200

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