Giving $1,000 to charity costs about $641 — and donating shares instead of cash can save another $593

Most people treat a donation as money gone. The tax system treats the first $200 and everything above it very differently — and what you donate can matter as much as how much.

The credit has two speeds

Donations earn a non-refundable tax credit, and the rate steps up once your total giving for the year passes $200. For 2026, the federal rates are:

• 14% on the first $200
• 29% on everything above $200 (33% on the portion that falls in the top federal bracket)

Your province adds its own. In Ontario that's 5.05% on the first $200 and 11.16% above it, so combined you get roughly 19% on the first $200 and 40% after.

Because the first $200 is worth so much less, giving once a year (or pooling small gifts into one year) beats spreading them across years.

A $1,000 gift, worked out

For an Ontario resident, a $1,000 donation generates about $359 in credits ($260 federal plus $99 provincial). The gift effectively costs about $641. That's before Ontario's surtax, which nudges the value up for higher earners.

On a $90,000 salary, the Metrestick take-home pay calculator puts the Ontario marginal rate at 29.65% — meaning the donation credit above $200 is worth more than the tax you'd pay on the next dollar you earn. Giving shifts income you'd have lost at roughly 30% into a charity that gets 100%.

Shares beat cash: the capital gains trick

If you hold investments that have gone up, donating them directly (in kind) does two things at once: you get a receipt for full market value, and the capital gain is not taxed at all for publicly listed securities.

Say you own shares worth $10,000 that you bought for $6,000:

• Sell, then donate the cash: you realize a $4,000 gain. Half of it ($2,000) is taxable — at a 29.65% marginal rate, about $593 in tax.
• Donate the shares: no gain is triggered. The same $10,000 receipt, and you keep the $593.

The credit itself is the same either way — roughly $3,970 on $10,000 in Ontario — so the saving is purely the tax you never pay.

This only works with an in-kind transfer to the charity, not a sale followed by a cash gift. Many charities have a broker form for this; ask early, because transfers can take days.

The rules to get right

• December 31 is the cutoff for a 2026 credit. A gift made in January belongs to 2027.
• You don't have to claim this year. Unclaimed donations carry forward up to five years, so you can save receipts and claim them in a higher-income year.
• Either spouse can claim, and pooling receipts on one return usually pushes more of the total above the $200 line.
• The annual claim is capped at 75% of net income. Few people hit it.
• Only receipts from registered charities count. Check the charity's status with the CRA before giving, and keep the official receipt.

The takeaway

For a typical giver, a donation costs around 64 cents on the dollar. For someone holding appreciated shares, donating them rather than cash is the cleaner move — same credit, no capital gains bill. Plan it before the last week of December, when brokers and charities are busiest.

Figures from Metrestick (metrestick.ca) and CRA 2026 donation credit rates; verify against your own return before acting.