If Nelson receives a state tax credit for his contribution, how much can he claim as a charitable deduction?

When evaluating the impact of a state tax credit on the amount Nelson can claim as a charitable deduction, it's important to recognize how tax credits interact with charitable contributions.

When a taxpayer receives a state tax credit for their charitable donation, the amount that can be claimed as a charitable deduction on their federal tax return is reduced by the amount of the tax credit received. This is because the state tax credit effectively decreases the cost of making the donation, thereby reducing the tax benefit one can claim for the same donation.

In this scenario, if Nelson receives a generous $300 state tax credit for his contribution, it indicates that the credit reduces the effective value of his donation when determining the deductible amount. This means he can only claim the amount of his contribution that exceeds that state tax benefit while filing his federal taxes.

Thus, given the state tax credit of $300, the correct amount Nelson can claim as a charitable deduction is indeed $300. This reflects the operation of deductions and tax credits in accounting for the financial benefits of charitable contributions on a federal tax level.