Sources & Methodology
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IRS Section 7520 Interest Rates
Monthly IRS applicable federal rate used to calculate the present value of the charitable remainder interest and deduction amount
Methodology: Annual income = Asset Value x Payout Rate (CRUT) or fixed dollar amount (CRAT). Capital gains avoided = (Asset Value - Cost Basis) x long-term capital gains rate (20%). Charitable deduction estimated as: Asset Value x (1 - Payout Rate / IRS 7520 Rate) adjusted for trust term using present value factor. Tax savings on deduction = Deduction Amount x Income Tax Rate. Deductions limited to 30% of AGI for appreciated property; 5-year carryforward applies. These are estimates only.
Last reviewed: March 2026 — payout rules and deduction limits verified against IRS Publication 1459 and current Section 7520 rates.
Charitable Remainder Trust Calculator — How CRT Income and Tax Deductions Work
A charitable remainder trust (CRT) is one of the most powerful estate planning tools available to high-net-worth individuals with appreciated assets. It lets you convert a low-yield, highly appreciated asset — such as real estate, stock, or a business interest — into a lifetime income stream, avoid capital gains tax, take an immediate charitable deduction, and ultimately benefit a charity of your choice.
Charitable Remainder Trust Formula — How the CRT Calculator Works
CRAT vs CRUT — Which Charitable Remainder Trust Is Right for You?
| Feature | CRAT (Annuity Trust) | CRUT (Unitrust) |
|---|
| Payment amount | Fixed dollar amount | % of trust value (varies) |
| Inflation protection | None | Yes — grows with trust |
| Additional contributions | Not allowed | Allowed |
| Investment risk | Trust bears it alone | Shared with beneficiary |
| Best for | Predictable income need | Long-term growth preference |
| Minimum payout | 5% of initial value | 5% of annual value |
| Payment floor | Yes — fixed minimum | No floor |
Capital Gains Tax Savings — The Core Benefit of a Charitable Trust
The most immediate financial benefit of a charitable remainder trust is avoiding capital gains tax on appreciated assets. If you own $500,000 of stock with a $50,000 cost basis and sell it directly, you owe $90,000 in federal capital gains tax (20%), leaving only $410,000 to invest. By contributing the stock to a CRT instead, the full $500,000 stays in the trust and generates income — effectively giving you a $90,000 advantage from day one.
This CRT capital gains tax savings is why financial planners frequently recommend charitable remainder trusts for clients holding low-basis real estate, appreciated company stock, or built-up business interests they want to diversify out of.
Charitable Deduction Rules — IRS Section 664 and 7520
The charitable tax deduction for a CRT equals the present value of the remainder interest that will eventually pass to charity. This is calculated using the IRS Section 7520 rate — a monthly published rate based on 120% of the applicable federal mid-term rate. A higher 7520 rate produces a larger charitable deduction. A lower 7520 rate produces smaller deductions but larger income streams.
Key IRS rules for CRT deductions:
Minimum remainder: The charitable remainder must equal at least 10% of the initial contribution value. If your payout rate is too high or term too long, the trust may not qualify.
Deduction limit: Deductions for appreciated property contributed to a CRT are limited to 30% of your adjusted gross income (AGI) per year.
5-year carryforward: Unused deductions can be carried forward for up to 5 additional tax years.
Appraisal required: Non-cash assets (real estate, closely-held stock) require a qualified appraisal within 60 days before contribution.
IRS Section 7520 Rate — How It Affects Your CRT
| 7520 Rate | Effect on Deduction | Effect on Income | Best Trust Type |
|---|
| Low (2-3%) | Smaller deduction | Higher income potential | CRUT |
| Moderate (4-5%) | Balanced | Balanced | Either |
| High (5-7%) | Larger deduction | Lower relative income | CRAT |
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Timing tip: Establish your CRT in a month when the IRS Section 7520 rate is high if maximizing the charitable deduction is your primary goal. Establish it when rates are low if maximizing income is the priority. You can check the current month's 7520 rate at
IRS.gov. The March 2026 rate is approximately 5.2%.
Frequently Asked Questions
What is a charitable remainder trust and how does it work? +
A charitable remainder trust (CRT) is an irrevocable trust where you transfer appreciated assets, receive income payments for a set period, and the remaining assets pass to charity at the end of the term. The three main benefits are: an immediate charitable tax deduction, avoidance of capital gains tax on donated appreciated assets, and a lifetime or fixed-term income stream. CRTs are governed by IRS Section 664.
How much income does a charitable remainder trust pay? +
A CRUT pays a percentage of the trust value recalculated annually — typically 5% to 7%. On a $500,000 trust at 6%, that is $30,000 per year, growing or shrinking as the trust value changes. A CRAT pays a fixed dollar amount calculated as the payout rate applied to the initial contribution. The IRS requires a minimum payout of 5% and a maximum of 50%.
What is the charitable deduction for a CRT? +
The charitable deduction equals the present value of the remainder interest that will pass to charity, calculated using the IRS Section 7520 rate. It must be at least 10% of the initial contribution. The deduction is limited to 30% of AGI per year for appreciated property and can be carried forward for 5 years. On a $500,000 contribution, deductions typically range from $100,000 to $250,000 depending on payout rate, term, and 7520 rate.
Can a charitable remainder trust avoid capital gains tax? +
Yes. When you contribute appreciated assets to a CRT, the trust sells them tax-free. The full pre-tax value remains invested in the trust, generating higher income than if you had sold outside the trust and paid capital gains. On a $500,000 asset with $50,000 basis, you avoid $90,000 in federal capital gains tax. State capital gains taxes are also avoided depending on your state.
What is the difference between a CRAT and a CRUT? +
A CRAT (Charitable Remainder Annuity Trust) pays a fixed dollar amount every year regardless of trust performance. A CRUT (Charitable Remainder Unitrust) pays a fixed percentage of the trust value recalculated each year, so payments fluctuate with investment performance. CRUT payments can increase with inflation and strong returns. Additional contributions are allowed to a CRUT but not a CRAT. Most estate planners recommend CRUTs for long-term income planning.
How much do you need to start a charitable remainder trust? +
Most attorneys and trust administrators require a minimum of $100,000 to $250,000 in assets to make a CRT cost-effective, given legal setup costs of $3,000 to $8,000 and annual administrative fees of 0.5% to 1.5% of trust assets. Below $100,000 the fees tend to consume too much of the benefit. CRTs are typically used by donors contributing $250,000 to $5 million in appreciated assets.
What assets can be contributed to a charitable remainder trust? +
Almost any asset can be contributed to a CRT including publicly traded stock, real estate, closely-held business interests, mutual funds, bonds, and cash. The most tax-efficient contributions are highly appreciated low-basis assets where the capital gains tax savings are largest. Real estate contributions require a qualified appraisal. Retirement accounts (IRAs, 401ks) generally should not be contributed to a CRT due to adverse tax treatment.