The Community Foundation of Northeast Iowa is proud to be able to offer the Endow Iowa State Tax Credit, where donors may receive a 25% Iowa state tax credit for gifts made to permanent endowment funds that benefit Iowa charitable causes and provide sustainable support to Iowa nonprofits. The Endow Iowa Tax Credit program provides unique tax benefits to the donor and impacts their community now and into the future.
How Endow Iowa Works
- Endow Iowa Tax Credits are only available to qualified gifts made through a qualified Iowa community foundation, like the Community Foundation of Northeast Iowa and our affiliates. The Community Foundation of Northeast Iowa is confirmed in compliance with National Standards for U.S. Community Foundations.
- A variety of gifts qualify for Endow Iowa Tax Credits including cash, real estate, appreciated securities, and outright gifts of retirement assets.
- Tax credits of 25% of the gifted amount are limited to a maximum of $100,000 in tax credits for an individual for a gift of $400,000 or $200,000 in tax credits per couple for a gift of $800,000 if both are Iowa taxpayers. No minimum gift amount is required to qualify for Endow Iowa Tax Credits.
- Endow Iowa Tax Credits are available on a first-come, first-served basis until the yearly appropriated limit is reached (currently $6 million in Endow Iowa tax credits are available per year). If the current year’s tax credits have been exhausted, qualified donors are eligible to apply for the next year’s Endow Iowa Tax Credits.
- Applications must be submitted within 12 months of the date of the donation.
- All qualified donors have five years to use their Endow Iowa Tax Credits.
- Effective August 28, 2018, taxpayers who receive Endow Iowa Tax Credits and itemize on their federal tax return are 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 state and local taxes (SALT) cap. We recommend consulting with your tax professionals.
- For example, a taxpayer who 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.
Endow Iowa Tax Credit Illustration
| 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) | ($2,775) | ($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.
We encourage donors to consult with their tax advisors to review individual circumstances and learn how they can take advantage of this unique opportunity.
Giving
