Charitable giving to certified non-profits is a great way to give back, while also helping yourself come tax time. However, there is some confusion out there about how much it actually helps you.

Many people believe that you save $1 for every $1 you donate to a nonprofit. However, this is not accurate.

Charitable donations are simply deductions from your taxable income. So donating $100 does not lower your tax bill $100. It lowers your taxable income by $100.

Let’s take a look at a more realistic example of charitable giving:

You make $50,000 a year at your job. You have no other income, like rental or investment income. You can use this chart to figure out your tax bracket, telling you how much you owe using your annual income: $50,000. Now let’s say you make a $1,000 donation to your high school when they send you one of those letters in the mail. You will get a $1,000 deduction from that gift.

What does that mean for my taxes and charitable giving?

Refer back to that chart. You do not subtract the $1,000 from the amount you determined that owe in taxes. You subtract it from the $50,000 (your total taxable income). Now your taxable income is $49,000 so you have to recalculate how much you own based on this new number. In this case it probably didn’t change much. But if you made a larger donation, like $15,000, you took your taxable income down into a lower bracket.

Making a $15,000 donation while making $50,000 is pretty generous and probably doesn’t occur all that often but let’s pretend that instead of making $50,000 a year, you make $38,000 per year. The cutoff for your tax bracket is only $37,950. Now you only have to make a $50 donation to get into a lower tax bracket.

Charitable donations are not the only deductions available to you, but they are definitely helpful ones!