Special Report: Car Donations

When you donate your used car or truck to charity - your tax break is the vehicle's estimated retail value. Now, a new law that goes into effect on January 1 could lower that deduction. Many charities are seeing a decline.

Tom Bierbaum, CEO, Volunteers of America in Massachusetts
"It has already affected the amount and the frequency of donations to our organization and to many other organizations."

Here's how it works - if you donate your car by the end of this year, you can deduct the fair market value from your taxes. Say your car's fair market value is $4,500.

If you wait until next year, you can only deduct what the charity sells your car for. So, if the charity turns around and sells your car on the wholesale market, your tax break could be a lot less.

Tom Bierbaum, CEO, Volunteers of America in Massachusetts
"It is proven to be somewhat of a disincentive for people to donate."

Many charities won't take any old clunker. Cars need to run, have average mileage and, be less than 12 years old.

Tom Bierbaum, CEO, Volunteers of America in Massachusetts
"They just don't have very much resale value and if I don't realize something from the donation, we could potentially lose money on the donation."

One way Volunteers of America in Boston uses money from car donation: or the upkeep of this shared living residence in Jamaica Plain.

Terry, Jamaica Plain Resident
"I've been very happy here and they have taken good care of me."