Why Donating Your Car Could Mean More Dollars In Your Pocket

Do you have an unused, ugly or broken down car taking up valuable driveway or garage space? Are the necessary repairs more than you can spend or what the car is worth? Maybe the hassle of selling is too high and finding a reasonable offer from a dealership is too hard. You may be surprised to find that searching online for donation options might be easier and pay off in more ways than you thought.

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What are the benefits of donating a car?

There are so many benefits that go hand-in-hand with your used car donation.

  • It’s good karma. Donating your car to a charity will directly help a person in need or a worthy cause, and that’s often enough in itself. But the benefits definitely don’t stop there.
  • It’s a huge tax write-off. After donating your car, you will be able to deduct the amount of the donation from your taxes, which can often equal hundreds of dollars. That’s a large donation for very little effort!
  • It’s hassle-free. If you skipped your last few oil changes and haven’t gotten a safety and emissions check in years, don’t worry. When you donate your car, these things don’t matter and aren’t prerequisites for donating. Simply donate your car in its current condition, whatever that may be.
  • It’s on your schedule. Most charities will come pick up the car from you, wherever you are. They’ll tow it for free, and they’ll come whenever you want them to. You can typically set up the appointment online, too.
  • It’s a space-saver. Without an extra vehicle crowding your garage, you’ll have tons of room for activities. The opportunities are endless!

How does the donation process work?

It can differ from charity to charity, but typically, the donation process goes a little something like this.

  • Donate the car to your charity of choice.
  • The charity will then decide what to do with your car. Typically, they will either sell the car at an auction and use the proceeds to further their mission, or directly give it to one of their beneficiaries. What they do with it (and how much the car goes for) will depend on the type of tax cut you can take.

How do I claim my tax deduction?

Claiming your tax deduction for your donated car is simple. Just follow these steps.

  • First and foremost, make sure you get a receipt so you can claim this as a deduction on your taxes.
  • If your car sells for less than $500, you can claim the fair market value price for the car, up to $500.
  • If your car sells for more than $500, you can claim the actual amount for which the vehicle sold. So if it sold for $900, you can quickly deduct $900 from your taxes! It’s so easy.
  • If the charity uses your car for its mission (for instance, gives it to volunteers or to beneficiaries of the charity itself), you can deduct the fair market value.

What type of charity should I donate to?

The charity you choose is up to you. But here are some general criteria to follow to ensure that your car donation will reach the best possible recipient — and that you’re receiving the highest possible tax deduction.

  • Choose the right type of charity for your donation. In order to claim your donated car as a deduction, make sure that the charity you select is a tax-exempt non-profit organization, also known as a 501(c)(3).
  • Make sure it is an accredited, reputable charity. Do some research to see who their services benefit. Some common beneficiaries of these charities include victims of domestic violence, people who have recently experienced a natural disaster, military veterans, struggling families and those who are suffering from medical crises.


Martin, Ray. (2017, April 3.) How to Collect Tax Savings From Donating a Car. https://cbsnews.com/news/how-to-collect-tax-savings-from-donating-a-car/

Edmunds-Gareffa, Peter. (2017, October 24.) Car Donation: When It Makes Sense to Seek a Charity Tax Deduction. https://usatoday.com/story/money/personalfinance/2017/10/24/car-donation-when-makes-sense -seek-charity-tax-deduction/791075001/

Clarke, Warren. (2016, July 29.) Trade, Sell or Donate? How to Decide What to Do With Your Old Car. http://nydailynews.com/autos/street-smarts/decide-trade-in-sell-donate-old-car-article-1.2731020