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We all agree that it is a mitzvah to give tzedakah, but few of us understand the actual requirements with regard to how much to give, what qualifies as tzedakah, and when it must be given. The purpose of this essay is to spell out the requirement in a form that is easy to understand and straightforward to follow. It is my hope that this will lead all of us to proper observance of the mitzvah of tzedakah. Please keep in mind that this essay is for informational purposes only. For actual halacha, please consult with your rabbi.
How much to give?
A Jew is required to tithe his money and donate between one-tenth and one-fifth to tzedakah. For someone who is just begining to donate to tzedakah, this is best accomplished by giving away at least one-tenth of his net worth immediately, then donating at least one-tenth of his income each year. This can be a daunting consideration at first, but don't despair; instead begin giving small now and work up to the minimal one-tenth requirement. Also note that it is forbidden to give more than one-fifth as we are concerned that a person who gives away too much will become impoverished and come to rely on tzedakah himself. (This limit does not apply to those who are extremely wealthy.) The requirement to give one-tenth is referred to as maaser, a Hebrew word translated as "tithing".
When must the maaser be given?
Maaser must be given immediately, that is, as soon as you earn your money you have an obligation to tithe from it. The Chofetz Chaim says that it is praiseworthy to give smaller sums frequently. One who gives a large lump-sum once yearly will only think about tzedakah once per year; one who gives small sums frequently will always be thinking about tzedakah This will mold his character by making him into someone who is always looking for opportunities to give tzedakah. Thus it is common practice for religious Jews to give tzedakah several times daily, often when attending services at synagogue, in addition to making periodic large contributions.
How much should I give? Use my Maaser Calculator to find out!
It would be simple to compute maaser if you received all of your money once per year, as you could immediately make a payment of one-tenth, but a modern economy is quite complex. Paychecks may come weekly, but tithing each check individually might not be practical when money must also be set aside for monthly rent payments. And what about capital gains and losses, or once-yearly commission or bonus checks? What about taxes withheld or paid — how do these figure into maaser computations?
I recently began using a new accountant who is a Torah Jew and commented to him that we should be able to compute my maaser requirement on an annual basis from my tax return. What follows is an explanation of this computation using a standard US 1040 tax return. Based on this explanation, you should be able to easilly make the same computation with a 1040A, 1040-EZ or your country's form.
First, we must determine: what is our income for maaser purposes? The general rule to follow is simple: Hashem is your partner in your income. In computing your maaser income, you can deduct the normal and acceptable expenses that any other partner would allow you to deduct. What you couldn't deduct from a flesh-and-blood partnership you can't deduct form Hashem either. Thus:
- You can't deduct the cost of living such as housing expenses or the cost of owning a car.
- You can't deduct the cost of food or clothes (except for clothes required for your business, such as your uniform if you are a police officer).
- You can deduct expenses incurred purely for the purpose of earning your income such as the cost of your uniform (above), normal commuting costs (more on this below), or the expense of margin interest as offset by investment profits (Schedule A line 13). In general, Schedule A line 20 is completely deductible.
- Personal expenses, such as the cost of food while doing business or on business travel, are not deductible for maaser purposes even if they are deductible for tax purposes. Thus if I entertain a client at dinner and the dinner costs $100, and if this dinner and such an expense is deductible as a normal business expense, and if eating dinner at home would have cost me $5, then $95 is deductible as a maaser expense.1
- By the same token, dry cleaning expenses while traveling are only deductible to the degree that you occur additional expense due to your required business travel. (This is typically the case in a hotel where laundry and dry cleaning are very expensive compared to what you would pay at home.)
- In general, you can use commonly accepted accounting standards for the tax or accounting jurisdiction in which you reside.
Based on these rules, to compute your maaser income:
- Use the same accounting standard used for your tax return. This gives you your preliminary gross maaser income before deductions — line 22 on your 1040.
- Add in some tax-exempt income as follows.
- Add in tax-exempt interest from line 8b.
- Add in qualified distributions from line 9b.
- On lines 15, 16, and 20, the full income is included as maaser income, not just the taxable portion.
- Add in health insurance premiums, FSA expenses, and dependent-care expenses that were excluded from your W-2 income as reported on line 7. While this income is not taxable, it is maaser income.
- Tax-free income that went into a retirement (or other) account designated specifically for you that has no required vesting period — such as contributions into your 401k, tax-deductible IRA account, or non-qualified deferred compensation program is not considered maaser income in the year it is earned; instead, it will be considered maaser income in the year it is received. (Note: not everyone agrees with this. Some hold that this income is liable for maaser in the year it is earned and is then received "maaser-free" later.)
- As a general rule for other cases not outlined above:
- don't include income that will be taxable in a coming year (like 401k contributions);
- include income (or benefits) received this year on a tax-free basis (like FSA income).
- Add in some additional items that may not be taxable but are liable for maaser.
- Capital gain on the sale of private property is included as maaser income, but adjust for inflation when computing the cost. Thus, for example, gains on the sale of a personal residence is maaser income. To adjust the cost basis for inflation, use a cost-of-living index.2
- A capital loss on private property can be deducted from maaser income, but it can only count to offset the gain on the sale of private property. For example, if you sell your 5-year-old car at a capital loss versus the depreciated value, you can deduct this loss against your capital gains on the sale of your home. If you have no such capital gains, you cannot deduct this loss against W-2 income as your car (like your home) is not purchased for investment purposes but rather is property held for personal use.
- Donations of appreciated stock to charity are deducted at the appreciated value for tax purposes and the capital gain is not reported as income. These will appear on your Schedule A line 16. For maaser income, you need to add in the value of the capital gain as income. This is computed via form 8283 Part I by subtracting Column f from Column g for the donation in question. Note that:
- The entire value of Column g is considered maaser if donated to an appropriate maaser recipient.
- Part II is irrelevant unless you did not donate 100% of your interest in the property; in that case, you'll need to multiply the amounts by the appropriate percentage.
- Page 2 is irrelevant as well.
- Your Schedule C, C-EZ, D, and E income are all maaser income. Expenses or deductions taken directly on these forms (business expenses on Schedules C, C-EZ, and E, or offsetting losses on Schedule D) are deductible from maaser income reported on the same form.
- Benefits paid on your behalf by your employer for your benefit are considered maaser income. For example, if your employer pays non-taxable moving expenses or gives you a tuition reimbursement, these are both liable for maaser income. But a hotel that your employer pays for while you are travelling on business is not for your benefit and is not income. (You are staying at the hotel for your employer's benefit, not for your own enjoyment. The fact that you enjoy it is irrelevant. Similarly, if you employer pays for meals when you travel or when you work overtime, these are also not maaser income, as you are eating them where and when your employer requires you to do so.)
- Gifts and inheritance received are unquestionably maaser income regardless of whether or not they are taxable. This includes wedding gifts — which are best tithed en masse when received. Inheritance similarly should be tithed on receipt — even though the person you inherit from already tithed, the inheritance is maaser income to you on receipt. (This is similar to terumat maaser, a maaser that the Levi gives to the Cohen from the maaser rishon that the Levi receives. Even though terumah gedolah was already given to the Cohen prior to the taking of maaser rishon, the Levi owes terumah on the maaser that he receives.)
- You now have added up your gross maaser income. Next, compute your maaser deductions.
- You may deduct normal (not excessive) commuting expenses. For example, I work in New York City. The normal way to commute from my home area to my workplace is to drive to a nearby commuting point and take the train. I can deduct the mileage involved in driving to this location, the normal cost of parking, and the normal train fare. In my case, this is 20 miles (round trip), $4 per day of parking, and $1.35 each way for the PATH train. Now I may park one day in the expensive $7 indoor lot, but I don't get to deduct $7 as $4 is the normal cost of parking. Similarly, if I decided one day to pay $100 to be driven to work in a limosine, I would not get to deduct $100 but only the normal expenses as outlined above. (Yes, this is a subjective measure. When deciding what is "normal", keep in mind that Hashem is your partner and that He will be most unhappy if you are inflating your expenses.) Use the IRS business mileage deduction rate to compute the deductible cost of your commuting mileage.
- You may not deduct any allowance for household or living expenses such as food, rent, or mortgage.
- Deduct non-taxable income that will be liable for maaser in the year received such as contributions to a retirement account. In general, form 1040 lines 25 and 32 are deductible.
- Deduct any income you never received such as that reported on form 1040 line 33, but only to the degree that this deduction was taken from income rather than from the initial investment.
- Alimony paid (1040 line 34a) is not deductible; however, to the degree that your ex-spouse would be in poverty were it not for your alimony paid, these payments may be considered maaser donations. Consult with your rabbi as this will vary depending on the circumstances. Note that alimony received (line 11) is always liable for maaser, even if the payer of the alimony has already taken maaser from his or her income before paying alimony. What about child support?
- Certain taxes are deductible from your maaser income; others are not.
- Income taxes are completely deductible. This includes form 1040 lines 62 and Schedule A line 5 (unless you check box 5b).
- Other taxes and insurance payments that are obligatory and either are taken as a flat payment or are computed based on your income are deductible. Thus required unemployment insurance (state unemployment insurance) is deductible, as are medicare, social security, or FICA withholding. Note that, conversely, income received from medicare, social security, or unemployment insurance is considered maaser income. Thus you can deduct the amounts shown on your W-2 lines 4 and 6. For more on unemployment insurance, see "Are unemployment insurance payments subject to maaser?"
- Sales tax is not deductible — it's part of the cost of the item.
- Real Estate taxes are not deductible. These are not only part of normal household expenses, they are also a "fee for service" — in exchange for these taxes, the municipality picks up your garbage, maintains the streets, provides police, provides lighting on public roads, maintains sidewalks, etc.
- This means that you may deduct any amount shown on form 1040 line 10 that is due to a refund of tax money on which you already paid maaser such as a real estate tax rebate.
- Privately-held life insurance, disability insurance, health insurance, homeowner's insurance, car insurance and other insurance premiums are not deductible.
- Most tax deductions are not deductible maaser expenses. Among other things, your standard deduction, exemptions, and most expenses not mentioned herein are not deductible.
- You may deduct normal depreciation and amortization expenses for anything you hold and use for business purposes as per the normal custom were such property to be held for business in your tax jurisdiction. Note that this generally does not apply to your car as you deduct your mileage instead, and that includes a depreciation and amortization allowance already. But if you purchased a computer for business use, you could depreciate it for maaser purposes even if the depreciation is not deductible for tax purposes. (But make sure to add back in any personal use of the computer.)
- Deduct your maaser deductions from your gross maaser income to compute your net maaser income.
- For maaser purposes, you may deduct carry-over losses but only to the degree that they offset comparable carry-over income. Thus if you have a carry-over capital loss because your total capital losses exceed your gains in a given year, you can't carry that loss forward for maaser purposes. Instead, take it as a maaser deduction in the year incurred.
- If you have no income but instead lose money one year, you cannot carry that loss forward against maaser income in coming years.
- There are no carry-back losses or profits; include both of these in the year earned rather than the year accrued for tax purposes.
- With regard to your Schedule C or E, there is no need to add back expenses that would have been excluded if listed on your Schedule A. These expenses are part of the business transacted on the Schedule C or E and are thus directly deductible there. However, if this results in a net Schedule C or E loss, this loss cannot be deducted from ordinary maaser income.
That's it, you've computed your net maaser income. Having done so, you can now compute your maaser obligation for the year as between one-tenth and one-fifth of this amount. Next, determine how much of your obligation is still owed by computing how much of your charitable contributions over the period qualify as maaser. To compute this amount:
- Start with your charitable contributions as reported on Schedule A line 18, but reduce it by any amount on line 17 (as this amount would have been deducted from your maaser obligation in the year given). There are no carry-over or carry-back maaser contributions.
- Deduct any IRS-accepted charitable contributions that are not considered maaser. What is considered maaser?
- In general, the basic maaser obligation is to support the poor and only contributions for this purpose are included, but some other tzedakah is included as well.
- Gifts in support of the performance of a mitzvah by another person are considered maaser, but not money spent for your own performance of a mitzvah. For example, if you buy a lulav and etrog for someone who would not have had one, whether that person wouldn't have one due to financial or spiritual poverty, that gift is a gift of maaser. If you buy one for your friend, that likely isn't unless your friend can't afford one.
- Support of a Torah scholar is maaser, as is an Issachar-Zevulun partnership.
- Your synagogue membership dues are not maaser, but additional contributions to the synagogue might be. For example, if you make a contribution to subsidize the memberships of those who can't afford to join the synagogue, that is certainly maaser. Financial support of the rabbi and other synagogue staff is maaser. Additional contributions that support classes, speakers, and Torah education may also be maaser.
- Extra contributions made to the synagogue in exchange for intangible religious benefits such as an aliyah to the Torah are maaser subject to the same conditions as other contributions above the basic dues level. The fact that you receive the benefit of the aliyah does not detract from the contribution.
- The payment of wedding expenses (hachnasat kallah) for a poor bride is maaser just like any other gift to the poor.
- The payment of yeshivah tuition and related expenses is maaser if paid for a child who would not otherwise have the opportunity to have a Torah education. It is not maaser if paid for your own child unless you could not afford the education without the use of your maaser money.
- The purchase of seforim (religious books) that are used for study may be considered maaser. This is certainly the case if the books are contributed to the synagogue library. If the books are for personal use, the purchase may still be maaser, but only if either (1) you could not otherwise afford the purchase or (2) you make the books available for general use by lending them out to others.
- Note that the IRS will permit you to estimate charitable contributions under certain circumstances. For instance, if you put spare change or even dollar bills into the tzedakah box at synagogue, the IRS will allow you to estimate the annual total even if that total estimate comes to a number that would normally require you to have a receipt (over $50 I think). However, for maaser purposes, estimation is not appropriate. The Chofetz Chaim observes that failing to record small amounts could cause a person to contribute less than his obligation. For instance, perhaps at year end you find that you are $400 short of your maaser obligation. If you have no record, you may assume that you have given this over time, but perhaps you only gave $200 or $300. Even if you gave $399, you would not have fulfilled your obligation. Being only $1 shy of fulfilling the mitzvah is still short of fulfilling the mitzvah. The Chofetz Chaim notes that if you are accurate for your own benefit — so that you don't lose credit for the money you have given away — your accuracy also benefits those in need of those few extra dollars. (See Sefer Ahavat Chesed, Part II, Chapter 28.) At the end of each day, I record these few dollars of tzedakah in my calendar so that I can total it at year end.
Once you have added up your maaser given, subtract this from your maaser obligation and the remaining figure gives your remaining obligation. Contribute this amount to an appropriate maaser recipient — either a person, fund, or institution — immediately. Note that this amount counts as maaser toward the accounting period in question, not the accounting period you are currently in. Thus when computing your 1040 in April of this year, if you find that you are $1000 short of maaser for last year, remember not to count that $1000 contribution when you compute maaser contributions made this year. Doing so would double-count the $1000 as maaser in both of the two years in question.
Finally, note that some authorities prefer that maaser be computed every three or six months rather than annually. Also note that even those who hold that maaser can be computed annually agree that a Jew must constantly tithe his income by working toward an estimated maaser obligation. At year-end, he must make up for any shortfall. A good way to do this is to constantly tithe your paychecks at a 10% rate, then compute your precise obligation at year-end; I do this after preparing my federal tax return. At that time, I can make up for any obligation not fulfilled. If it turns out I have given more than was necessary, haray zeh meshubach!
This page is written based on the piskei halacha of Rav Moshe Feinstein ZTz"L, Rav Shlomo Zalman Auerbach ZTz"L, the Chofetz Chaim, and others, as brought in sefer Maaser Kesafim, edited by Cyril Domb, published by Feldheim Publishers. Please consult with your rabbi before acting on this information.
See also Ma'aseir Kesofim by Rav Yosef Fleischman.
1Aruch HaShulchan Y.D. 249:7 allows deduction of the full cost of the meal, but Beit Dino Shel Shlomo (Y.D. 1) and Rav Shlomo Zalman Auerbach disagree. See discussion in Maaser Kesafim pp. 60-61.
2Rav Moshe Feinstein says to use only vital commodities like essential foods in computing the change in cost of living. Houses and luxury items are not relevant since their values change for a variety of reasons. Igros Moshe, Y.D. Vol. 5, 114 as brought in Maaser Kesafim pp. 47-48.