With the holiday season upon us, many Americans are doing more than just adorning their homes with lights and busting their budgets at retailers. Many, in fact, are focused on charitable giving during this time of the year. In fact, 96% percent of U.S. adults have either made, or plan to make, a charitable donation by the time 2017 draws to a close, according to a Bankrate survey. Not only that, but roughly 20% say they'll be giving more to charity this year than they did in 2016.

Of course, giving to charity is a nice thing to do, and that's reason enough to reach into your wallet and direct a few dollars toward those who are less fortunate. But there's another reason it pays to be charitable, especially before 2017 comes to a close: The more you donate, the more you'll lower your tax bill.

The letters G-I-V-E hanging from a clothesline on gold paper


A key tax-saving move

Though most Americans don't itemize on their taxes, if you're planning to go that route rather than take the standard deduction, then being more charitable could pay off in a very big way. That's because you're allowed to write off every cash donation you give to a registered charity. All you need to do is retain some sort of proof of each contribution, and you'll be well on your way to a lower tax bill.

How much money will your charitable contributions save you? It depends on your effective tax rate, but the higher that number is, the more income you stand to shield from the IRS. If you donate $10,000 to charity and your effective tax rate is 33%, that move alone will save you $3,300. Now, if your tax rate is lower, you'll save less. For example, a $10,000 donation coupled with an effective tax rate of 25% will only result in a $2,500 reduction of taxable income. Still, whatever tax break you get can help keep the IRS away from your money.

Now one thing to keep in mind is that while it's nice to be generous, there is such a thing as overdoing it from a tax perspective. If the amount you write off for charitable donations is disproportionately high given your income, it could put you at risk for an audit. So, while the IRS probably won't flag your return if you claim $3,000 in donations against a $100,000 income, if you make $40,000 a year and attempt to deduct $10,000 in contributions, you may be asking for trouble.

You can donate more than just cash

Another great feature of the charitable contribution deduction is that it doesn't apply to cash alone; you can also write off the goods you give away, provided you retain a receipt and are dealing with a registered charity. There is another catch, though -- you can't deduct the amount you initially paid for the things you give away. Rather, you're required to deduct their fair market value, which accounts for factors such as your items being used or subject to wear and tear.

Interestingly, of those who give to charity, 35% like to donate clothing and other goods, compared to the 40% who typically donate cash. And then there's another category of giving at play -- nearly 20% of charitable adults opt to donate their time for volunteer work rather than give away money or goods.

Now the bad news is that you can't take a tax deduction for the value of your time. If you're a freelance IT consultant who charges $100 an hour, and you volunteer your services for two hours at your local registered charity, you can't write off the $200 you may have otherwise collected doing that work for a paying client. What you can do, though, is deduct the expenses you incur as part of that volunteer work. For example, if you drive 40 miles to and from that charity, you can write off that mileage on your tax return. Similarly, if you purchase $20 worth of cables to help your charity, you can take a deduction for that as well.

There are lots of good reasons to be charitable this year, but the fact that you might save a bundle on your taxes certainly doesn't hurt. But don't delay -- if you want to lower your tax bill for the current year, you'll need to make those donations before 2017 comes to a close.