03 May, 2026

Fair Market Value for Donations: The IRS Definition (Publication 561)

TL;DR: The IRS defines fair market value as the price a willing buyer would pay a willing seller, with neither under pressure to act. FMV is not the original purchase price, retail replacement cost, insurance value, or sentimental value. For clothing and household items, FMV is only deductible if the item is in good used condition or better — anything below that threshold is worth $0.

The IRS Definition of Fair Market Value (Publication 561)

IRS Publication 561 is the authoritative IRS document on valuing donated property. It defines fair market value as:

“The price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.”

Three elements make up the willing-buyer/willing-seller test:

Neither party is under compulsion. The buyer is not forced to buy; the seller is not forced to sell. A liquidation sale price does not reflect FMV.
Both parties have reasonable knowledge. Each side knows the condition, age, and relevant characteristics of the item. Ignorance of a defect does not inflate FMV.
The transaction is hypothetical and open-market. FMV is what the item would sell for publicly, not in a private sale between relatives or in a specialized market.

The result is a current-condition transaction price — what someone would actually hand over cash to own the item today, as-is.

What Fair Market Value Is NOT

The IRS explicitly excludes several common pricing references from the FMV calculation:

Not the original purchase price. A $200 jacket bought three years ago is not worth $200 today. Depreciation from use reduces value.
Not current retail price. The cost to buy the same item new at a store is replacement cost, not FMV for a used donation.
Not insurance replacement value. Insurance values are designed to make a policyholder whole, not to reflect actual used-market prices.
Not sentimental value. The IRS does not recognize personal attachment as a component of FMV. An heirloom worth $50 on the open market has an FMV of $50.

The Condition-Tier System

Condition drives FMV. The same category of item can have a fourfold difference in value depending on its condition tier. IRS Publication 526 establishes the minimum standard for deductibility.

Condition Tier	Description	Approximate FMV as % of Original Retail
Excellent	Like new; possibly still has tags; no visible wear	30–40%
Good	Gently used; minor wear; fully functional and complete	10–20%
Fair	Visible wear; functional but shows significant use	5–10%
Poor	Non-functional, broken, or missing key parts	$0 — not deductible

Fair condition items occupy a grey zone. They are technically deductible if still functional, but their FMV is near zero in practice, and many thrift stores will refuse them or price them at $1–$2. For tax purposes, a realistic FMV for Fair condition items is at the low end of the 5–10% range.

Poor condition items cannot be deducted under any standard valuation. The only exception under Publication 526 is a single item valued over $500 accompanied by a qualified written appraisal. Even then, the appraiser must assign a supportable value — a broken appliance worth nothing to a buyer cannot be inflated through appraisal.

FMV Reference Table by Category

These ranges reflect realistic thrift-market and eBay sold-listing prices. Use them as a starting point and cross-check against current comparable sales in your area.

Category	Good Condition FMV	Excellent Condition FMV
Men’s dress shirt	$4–$9	$10–$15
Women’s jeans	$5–$10	$12–$18
Men’s suit	$25–$60	$65–$100
Men’s shoes	$5–$15	$20–$35
Sofa	$50–$150	$200–$400
Dresser	$30–$80	$100–$200
Flat-screen TV (32”)	$30–$60	$75–$125
Laptop (5 years old)	$50–$100	$150–$250

These figures assume items are complete, functional, and free of damage beyond normal wear. A sofa with a broken leg or a laptop with a cracked screen falls into the Fair or Poor tier and should be valued accordingly — or not deducted at all.

When the IRS Requires a Qualified Appraisal

Most clothing and household item donations do not require an appraisal. However, the IRS mandates one in several situations:

Single item or group of similar items exceeding $5,000 in claimed value: A qualified appraisal must be obtained, and Form 8283 Section B must be completed and attached to your return. “Similar items” means property of the same category — ten donated paintings are grouped together, not counted individually.
Art valued over $20,000: The IRS may require a photograph of the artwork along with the appraisal.
Real property (land or buildings): Always requires a qualified appraisal regardless of value.
Vehicles, boats, and aircraft: These follow a separate rule. The deduction is generally limited to the gross proceeds the charity receives from selling the vehicle. The charity sends a Form 1098-C to both the donor and the IRS; the donor’s deduction is based on the amount on that form.

A qualified appraiser is someone who holds an earned designation from a professional appraisal organization, regularly performs appraisals for compensation, and is not the donor or the donee charity. The appraisal must be conducted no earlier than 60 days before the donation and no later than the due date of the return on which the deduction is claimed.

How to Determine FMV in Practice

Four methods are recognized or accepted by the IRS for non-cash donations:

1. Comparable sales. Find actual transaction prices for similar items in similar condition. eBay’s completed (sold) listings are the most accessible source — filter to “Sold items” to see what buyers actually paid, not what sellers are asking. Local Facebook Marketplace sold listings and thrift store shelf prices are also valid comparables.

2. Charity-published valuation guides. Goodwill and the Salvation Army both publish item valuation guides with condition-based ranges. These guides are derived from real thrift store pricing and are defensible to the IRS. They are most useful for common clothing and household items.

3. AI-assisted valuation tools. DeductAble uses AI to suggest FMV ranges based on item category, condition, brand, and comparable market data. The AI-generated estimate provides a starting point that you can confirm against sold listings, and the app stores the valuation for recordkeeping purposes.

4. Professional appraisal. Required for items over $5,000 (as described above) and recommended for any high-value item where the other methods produce a wide range of values or where the item has unusual characteristics (vintage, collectible, rare).

For most household donations, methods 1 and 2 are sufficient. Document your sources. Print or save the comparable listings you used, note the date you checked prices, and keep this documentation with your tax records for at least three years.

The Good Used Condition Rule

IRS Publication 526 contains a specific restriction on clothing and household items that does not apply to other property types. To qualify for a charitable deduction, these items must be in “good used condition or better.”

This rule has a direct effect on what you can deduct:

A worn-but-functional dress shirt in Fair condition may technically qualify, but its FMV is minimal (likely $1–$3) and may not be worth including.
A non-functional microwave, a shirt with permanent stains, or shoes with worn-through soles are in Poor condition and have $0 FMV — they cannot be deducted.
The charity accepting the items does not determine deductibility. Even if Goodwill accepts a bag of mixed items, you may not deduct items within that bag that fall below Good condition.

One exception: A single item worth over $500 in claimed value that is accompanied by a qualified written appraisal can be deducted even if it falls below Good condition. In practice, this exception applies mainly to antiques, collectibles, or specialty items that a charity accepts specifically for auction.

Frequently Asked Questions

How does the IRS define fair market value for donations?

According to IRS Publication 561, fair market value is “the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.” The key standard is what a real buyer would actually pay for the item in its current condition — not what it cost new, and not what a store charges for a new version today.

Is fair market value the same as retail price?

No. Fair market value for donated used property is almost always substantially less than current retail price. The IRS explicitly states that FMV is not the replacement cost of a new item. A dress shirt that retails for $60 new might have an FMV of $8–$12 in Good condition and $15–$20 in Excellent condition when donated.

What percentage of original price is fair market value for donated clothing?

The IRS does not specify a fixed percentage, but widely used guidelines place FMV at roughly 30–40% of original retail for Excellent condition items, 10–20% for Good condition, and 5–10% for Fair condition. Items in Poor condition have $0 FMV and cannot be deducted. These percentages should be cross-checked against actual comparable sales prices on eBay sold listings or thrift store pricing.

What is the “good used condition” rule for charitable donations?

IRS Publication 526 requires that donated clothing and household items be in “good used condition or better” to qualify for a deduction. Items that fall below this threshold — meaning they are heavily worn, broken, or missing key components — have $0 FMV and cannot be deducted. The only exception is a single item valued over $500 that is accompanied by a qualified written appraisal.

When does a charitable donation require a qualified appraisal?

A qualified appraisal is required when a single donated item, or a group of similar items donated in the same tax year, is valued over $5,000. The appraisal must be conducted by a qualified appraiser and attached to Form 8283 Section B when filing your return. Art valued over $20,000 may also require a photograph submitted to the IRS. Vehicles, boats, and aircraft require Form 1098-C from the receiving charity, regardless of the claimed value.

How do I find fair market value for donated furniture?

Search eBay completed listings or Facebook Marketplace sold listings for the same or similar furniture pieces in comparable condition. Charity-published guides from Goodwill provide ranges for common furniture categories. A used sofa in Good condition typically has an FMV of $50–$150; an Excellent condition sofa can reach $200–$400. A dresser in Good condition is generally worth $30–$80, and $100–$200 in Excellent condition.

What IRS publication covers fair market value for donations?

IRS Publication 561, “Determining the Value of Donated Property,” is the primary reference. It covers the willing-buyer/willing-seller definition of FMV, valuation methods by property type, and the qualified appraisal requirements. IRS Publication 526, “Charitable Contributions,” is the companion document covering the good used condition rule, deduction limits, recordkeeping requirements, and Form 8283 filing thresholds.

Can I use eBay sold prices to determine fair market value?

Yes. The IRS recognizes comparable sales as a valid method for determining FMV. Use eBay’s “Sold listings” filter — not active listings — to find actual transaction prices for items in similar condition. Document the specific listings you referenced by saving the URLs or screenshots, so you have support for your valuation if questioned. Focus on items in the same condition tier and of the same general age, brand, and model where possible.