The current setting for "Contribution Type" of either tax deductible or not, does not cover many common scenarios at nonprofits.
Use Case 1: A nonprofit is holding a fundraising dinner, the event fee is $100 per person. and the fair market is $25. So only $75. is considered tax-deductible.
Use Case 2: A nonprofit is holding a fundraising dinner with a price sets. Members are charged $100, Non-members are charged $150. Plus there is an option to buy a bottle of wine for $200 each. The fair market value is $25 for the dinner, and $80 for the wine.
So if a member gets dinner and a bottle of wine, they spend $300. So only $195. is considered tax-deductible.
Use Case 3: A nonprofit has a CiviContribute page setup to collect membership dues. Annual family membership is $3000. This type of membership includes the use of the indoor swimming pool and fitness area. The fair market value of the membership is $500. So only $2500 is considered tax-deductible.
The mail merge tokens that are used to generate year-end tax letters ( at least in the US ) need to itemize all financial transactions, plus list what portion is considered tax-deductible.