How Campaign Finance Works: Limits, Reporting & the FEC

Federal campaign finance works through a system of contribution limits, source restrictions, spending rules, and public disclosure, all enforced by the Federal Election Commission. Anyone running for President, the U.S. House, or the U.S. Senate has to raise money from permitted sources within set dollar caps, spend it only on campaign-related purposes, and report the details on a regular schedule. Understanding how campaign finance works starts with a single threshold: once a person raises or spends more than $5,000 trying to get elected to federal office, the full legal framework kicks in.

When Someone Becomes a Federal Candidate

A person officially becomes a federal candidate the moment their contributions or expenditures cross $5,000. At that point they must register with the FEC and designate a principal campaign committee, the single committee that receives contributions and makes spending decisions.1Federal Election Commission. Registering as a Candidate Additional authorized committees are allowed, but only one principal committee is required.

Before hitting $5,000, someone weighing a run can “test the waters” — traveling, meeting potential supporters, and gauging interest — without triggering registration and reporting. Presidential and vice-presidential candidates carry an extra obligation: a public financial disclosure report filed with the FEC within 30 days of becoming a candidate, or by May 15 of that year, whichever is later.2Federal Election Commission. Presidential, Senate and House Candidates

Who Can Give Money to a Federal Campaign

Most campaign money comes from individual donors giving directly to a candidate’s authorized committee. These direct contributions, often called “hard money,” are subject to strict limits and must be fully disclosed. Individuals are the financial backbone of federal campaigns, but they are not the only permitted source.

Political Action Committees channel money from groups of people with a shared interest, such as employees at a company or members of a trade association. A multicandidate PAC can give up to $5,000 per election directly to a candidate.3Federal Election Commission. Contribution Limits for 2025-2026

Super PACs operate differently. They cannot give money directly to candidates or coordinate with campaigns, but they can spend unlimited amounts on advertising and other communications supporting or opposing a candidate.4Federal Election Commission. Making Independent Expenditures The legal key is independence: their spending decisions cannot be made in consultation with the candidate or campaign team.5Federal Election Commission. Understanding Independent Expenditures Super PACs must register with the FEC and disclose their donors.

A less transparent layer of spending comes from certain nonprofits, particularly 501(c)(4) social welfare groups and 501(c)(6) trade associations. These organizations can spend on political activity and donate to Super PACs, but under current federal law they are generally not required to publicly disclose their own donors. This is the spending commonly called “dark money.”

Sources That Are Off-Limits Entirely

Some money cannot be used in federal elections at all, no matter the amount.

Foreign nationals cannot make any contribution or spend any money in connection with a federal, state, or local election. The law defines “foreign national” as someone who is neither a U.S. citizen nor a lawful permanent resident, meaning green card holders can contribute but everyone else without permanent resident status cannot.6Office of the Law Revision Counsel. 52 USC 30121 – Contributions and Donations by Foreign Nationals The ban covers direct donations, independent spending, and in-kind support.

Federal government contractors are barred from contributing to any political party, committee, or candidate during the full period from when contract negotiations begin through completion of the contract or the end of negotiations.7Office of the Law Revision Counsel. 52 USC 30119 – Contributions by Government Contractors

Corporations and labor unions cannot contribute directly from their general treasuries to federal candidates. They can set up separate segregated funds, commonly known as corporate or labor PACs, that collect voluntary contributions from employees or members.8Federal Election Commission. Who Can and Cannot Contribute The PAC’s money comes from individuals, not the organization’s operating budget. Super PACs, however, can accept corporate and union treasury funds because they make only independent expenditures.5Federal Election Commission. Understanding Independent Expenditures

Volunteer time is not a contribution. An individual can donate personal time and services to a campaign without any reporting, as long as no one compensates them.9Federal Election Commission. Volunteer Activity If a third party pays someone for time worked on a campaign, that payment becomes an in-kind contribution the campaign has to disclose.

How Much Money People Can Give

Every two years the FEC adjusts most contribution limits for inflation. The current limits apply to the cycle that began on November 6, 2024 and runs through November 3, 2026.10Federal Election Commission. Contribution Limits for 2025-2026 Individual caps for this cycle:

Candidates Spending Their Own Money

There is no cap on how much of their own money candidates can put into their campaigns. A candidate can write a personal check or loan any amount to their committee. After the 2022 Supreme Court decision in FEC v. Ted Cruz for Senate, there is also no limit on how much a campaign can repay in candidate personal loans using post-election contributions. The Court struck down the former $250,000 repayment cap as an unconstitutional burden on a candidate’s right to fund their own campaign speech.11Federal Election Commission. Supreme Court Finds Limit on Candidate Loan Repayments Unconstitutional in FEC v Ted Cruz for Senate

What Campaigns Can and Cannot Spend Money On

Campaign money can go toward any expense connected to the campaign itself: advertising, polling, travel, staff salaries, office space, and similar operational costs. It can also cover ordinary expenses tied to a federal officeholder’s duties, like official travel. Surplus funds can be donated to charities, transferred to political party committees, or used for any other lawful purpose, as long as none of it crosses into personal use.12eCFR. 11 CFR Part 113 – Permitted and Prohibited Uses of Campaign Accounts

The Personal Use Ban

The core test is simple. If an expense would exist whether or not the person were running for office, campaign funds cannot pay for it.13Federal Election Commission. Personal Use The FEC keeps a list of expenses that are automatically prohibited:

  • Mortgage, rent, or utility payments for the candidate’s personal residence.
  • Household items such as groceries and cleaning supplies.
  • Clothing, even a suit bought for a debate (though campaign T-shirts and similar branded items are fine).
  • Tuition, unless the training is for campaign staff rather than the candidate.
  • Entertainment such as concerts or sporting events, unless tied to a specific campaign activity.
  • Club memberships (country clubs, gyms, recreational facilities), unless a specific fundraising event takes place there.
  • Funeral or burial expenses for the candidate’s family.
  • Vacations.

Payments to a candidate’s family members are allowed only if the family member provides genuine services to the campaign and is paid no more than fair market value for that work.13Federal Election Commission. Personal Use The FEC frequently finds violations in this area.

Salary From Campaign Funds

A candidate who is not already a federal officeholder may draw a salary from campaign funds, but the amount is capped. The compensation cannot exceed the lesser of two amounts: 50% of the annual salary of a U.S. House member (currently $174,000, making the cap $87,000), or the candidate’s average annual earned income over the five calendar years before they became a candidate.14Federal Register. Candidate Salaries Any outside income the candidate earns after filing their Statement of Candidacy reduces the allowable salary dollar for dollar. Sitting officeholders cannot draw campaign compensation at all.

Campaign funds can also cover reasonable security measures for the candidate, their family, and staff when the security need arises from the campaign itself, including alarm systems, security personnel, and cybersecurity services.12eCFR. 11 CFR Part 113 – Permitted and Prohibited Uses of Campaign Accounts

What Campaigns Have to Report

Transparency is the other half of the framework. Every committee registered with the FEC files regular financial reports detailing who gave money, how much, and where it went.

Itemizing Donors

When any individual’s contributions to a single committee add up to more than $200 during an election cycle, the committee must itemize that donor by name, mailing address, occupation, and employer.15Federal Election Commission. Individual Contributions Contributions below $200 still have to be recorded internally, including date and amount, even though they do not appear individually in public filings. A series of small donations from the same person can cross the $200 threshold later in the cycle, so campaigns track every dollar from the start.

Filing Schedule

Most candidate committees file quarterly reports, with deadlines in April, July, October, and January covering the preceding three months. In election years, committees also file pre-election and post-general reports so voters can see financial data before they cast ballots.16Federal Election Commission. Quarterly Reports Presidential campaigns that raise or spend $100,000 or more file monthly instead of quarterly.

Electronic filing is mandatory for any committee that receives contributions or makes expenditures exceeding $50,000 in a calendar year.16Federal Election Commission. Quarterly Reports Electronically filed reports are posted to the FEC’s public database, typically within 24 hours.

48-Hour Notices

In the final 20 days before an election, an accelerated rule takes over. If a candidate committee receives a contribution of $1,000 or more during this window, it must file a 48-hour notice disclosing that contribution. This applies to all types of contributions, including personal loans from the candidate and in-kind support.17Federal Election Commission. 48-Hour Notices

Bundling by Lobbyists

When a registered lobbyist collects and forwards contributions from multiple donors to a campaign, a practice called “bundling,” the campaign has to separately disclose that activity once the bundled total exceeds $24,000 in a calendar year.18Federal Register. Price Index Adjustments for Contribution and Expenditure Limitations and Lobbyist Bundling Disclosure Threshold This threshold is adjusted periodically for inflation.

The FEC and What Happens When Rules Are Broken

The Federal Election Commission is the independent agency that enforces federal campaign finance law. It has six commissioners appointed by the President and confirmed by the Senate, with no more than three from the same political party.19Office of the Law Revision Counsel. 52 USC 30106 – Federal Election Commission The agency reviews financial reports, audits campaigns, manages the presidential public funding program, and issues guidance on how the law applies to new situations.

Anyone directly affected by a campaign finance question can request an advisory opinion. The request has to describe a real planned activity; the commission will not answer hypothetical or abstract questions.20Federal Election Commission. The Advisory Opinion Process Once the FEC issues an opinion, anyone who acts in good faith in accordance with it, or engages in materially identical activity, receives a legal safe harbor.

Penalties escalate with the severity of the violation. For late or missed reports, the FEC runs an Administrative Fine Program with a preset penalty formula, and if a committee ignores the fine the debt goes to the U.S. Treasury with a 30% collection fee added.21Federal Election Commission. Administrative Fines More serious civil penalties reach up to roughly $87,000 for knowing and willful violations under the latest inflation-adjusted schedule.22Federal Register. Civil Monetary Penalties Annual Inflation Adjustments

Criminal prosecution is reserved for the worst cases. A knowing and willful violation involving $25,000 or more in a calendar year can result in up to five years in federal prison. Violations between $2,000 and $25,000 carry up to one year. Funneling money through straw donors to hide the true source, a violation of 52 U.S.C. § 30122, carries enhanced penalties, including fines of 300% to 1,000% of the amount involved.23Office of the Law Revision Counsel. 52 USC 30109 – Enforcement

Taxes and Closing Down a Campaign

Federal campaign committees are classified as political organizations under Section 527 of the Internal Revenue Code and must file a notice with the IRS to keep their tax-exempt status.24Internal Revenue Service. Exemption Requirements – Political Organizations For donors, the rule is often misunderstood: contributions to political campaigns are not tax-deductible. The IRS treats them the same as nondeductible lobbying costs.25Internal Revenue Service. Nondeductible Lobbying and Political Expenditures

A campaign does not simply stop existing after election night. Win or lose, the committee has to account for every remaining dollar before filing a termination report. If it has outstanding debts, it can keep raising money for debt retirement, subject to the same contribution limits that applied during the campaign, and has to make reasonable efforts to pay creditors before settling any debt for less than the full amount owed.26eCFR. 11 CFR Part 116 – Debts Owed by Candidates and Political Committees

Surplus funds, meaning money left over after all debts are paid, can go to charities, to any national, state, or local party committee, to state and local candidates (subject to state law), or to any other lawful purpose that is not personal use.27Federal Election Commission. Winding Down Costs Until the termination report is accepted, the committee must keep filing regular financial reports, even if the candidate has long since moved on.