Are you making charitable contributions through your S Corporation? You might be cutting into your QBI deduction without realizing it. In Part 4 of our Big Beautiful Tax Bill video series, we explain how charitable giving can unintentionally reduce one of your most valuable tax breaks.
Here’s what every S Corp owner needs to know:
1️⃣ Charitable contributions aren’t deductible at the S Corp level
When your S Corp gives to charity, that donation doesn’t reduce your business income. Instead, it passes through to your personal tax return—but not without consequences.
2️⃣ It lowers your Qualified Business Income (QBI)
That flow-through charitable donation reduces your QBI, which is the number used to calculate your 20% QBI deduction. Less QBI = smaller deduction = higher tax bill.
3️⃣ You may get a better tax result by giving personally
Making donations directly from your personal funds (instead of the business) allows you to preserve your full QBI deduction and claim the charitable donation on Schedule A if you itemize.
💡 Pro Tip: Classify donations as advertising when possible
If your business is sponsoring a nonprofit or event and receiving marketing recognition, you may be able to treat the expense as advertising. That means:
- Your business gets a full deduction
- You still support a cause you care about
- You keep your QBI deduction intact
It’s a smart strategy that combines generosity with tax efficiency.
🎥 Watch Part 4 now on YouTube
🔗 Here
📚 Want more practical tax tips for small business owners?
Check out our full Big Beautiful Tax Bill series and other blog posts here.
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