If you donate a car to charity and itemize deductions on your income tax return, it may be possible to claim a deduction for your car donation.
In 2005, the IRS changed the laws related to tax deductibility of car donations because of exaggerated deductions based on inflated book values (book values tend to become less reliable as a vehicle ages). Under the new rules, the deductible amount of your vehicle donation is directly related to the selling price of your vehicle.
Donate a car and if it sells for less than $500 you can take a tax deduction equal to the 'fair market value' of your donation up to $500. Fair Market Value is loosely explained as the "Blue Book" or "Guide Book" value of your vehicle. See our car donation to charity help links below for Kelley Blue Book, NADA Guides or Edmunds.