Tax Savings Through an Accredited Foundation
The Community Foundation of Northeast Iowa is proud to be able to offer the Endow Iowa 25% State Tax Credits for gifts made to permanent endowment funds that benefit Iowa charitable causes, including funds supporting Iowa nonprofits. Endow Iowa Tax Credits allow donors to have an even greater impact on their philanthropic interests in Iowa now and into the future. When you donate to a permanently endowed fund, you’re not only helping your neighbors today, you’re building a stronger community tomorrow. A variety of gifts qualify for Endow Iowa Tax Credits including cash, real estate, appreciated securities, and outright gifts of retirement assets. We encourage donors to consult with their tax advisors to review individual circumstances and learn how they can take advantage of this unique opportunity.
Due to these changes, the application for your Endow Iowa eligible gift must be received by our office by June 15, 2023 to be eligible for the tax credit. We strongly encourage all donors wanting to take advantage of this program to make your gift and submit your application prior to this deadline to be placed on the 2024 waitlist. See program change specifics below.
Endow Iowa Tax Credit 2023 Update and Changes
There has been high demand for Endow Iowa tax credits in recent years, with the $6 million in yearly credits being fully allocated prior to year-end for the past several years. Due to this demand, many donors have been added to a waitlist to receive future credits. In order to keep this program working for Iowans, the State has decided to implement some changes to the program in 2023.
- Beginning January 1, 2023, the maximum credit per taxpayer is $100,000 (or $200,000 per couple). This change will apply to tax credit applications received on January 1, 2023, or thereafter. This is a reduction from the current limit of $300,000 per taxpayer (or $600,000 per couple).
- The waitlist process will be discontinued on July 1, 2023. Only applications received on or before June 30, 2023, will be added to the waitlist. All applications that are currently on the waitlist will not be affected by this change. Donors who apply for the tax credit prior to June 30, 2023 will continue to be placed on the 2024 waitlist. Iowa Economic Development Authority (IEDA) will not accept additional applications for tax credits until the current waitlist has been fully awarded (expected after January 1, 2024).
- Beginning July 1, 2023, applications must be submitted within 12 months of the date of the donation.
The Community Foundation will continue to keep those who work through us to support the nonprofits and communities they love updated as we continue to learn more about these changes.
Federal Tax Information
Effective August 28th, 2018, taxpayers who receive Endow Iowa Tax Credits and itemize on their federal tax return will be required to reduce their federal charitable deductions by the value of any state tax credit received. There is an opportunity to deduct the full value of the gift if you have not reached the $10,000 SALT cap. We recommend consulting with your tax professionals.
- For example, a taxpayer that makes a $100 charitable donation to Endow Iowa would receive a $25 (25%) state tax credit. When filing federal taxes, the taxpayer cannot deduct the entire $100 charitable donation like in the past, but only the difference between the donation and the state tax credit, or $75 in this example.
*The Community Foundation of Northeast Iowa is confirmed in compliance with National Standards for U.S. Community Foundations.
What does it really cost to give?
|Cash gift to qualified endowment fund||$1,000||$10,000||$100,000||$400,000|
|Endow Iowa Tax Credit (25%)||($250)||($2,500)||($25,000)||($100,000)
|Net Federal Deductible Gift||$750||$7,500||$75,000||$300,000|
|Federal tax savings*||($277.50)||($2,770)||($27,750)||($111,000)|
|Net cost of gift||$472.50||$4,725||$47,250||$189,000|
* The above illustration assumes an individual or married couple is in the 37% federal tax bracket.