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.
Endow Iowa 2023 Tax Credits Have Been Allocated
There has been a 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. Because of this demand, many donors were added to a waitlist to receive future credits. In order to keep this program working for Iowans, the State passed legislation securing an additional $7 million in 2023, eliminating the existing waitlist. Due to the incredible generosity of Iowans, all $13 million in 2023 Endow Iowa state tax credits have been allocated. Donors who make an Endow Iowa eligible gift in the remainder of 2023 will be eligible to apply for a 2024 tax credit. Read below for more information and next steps.
- The Iowa Economic Development Authority (IEDA) has eliminated the waitlist process. No new Endow Iowa tax credit applications will be accepted in 2023. However, donors making gifts in the remainder of 2023 will be eligible to apply for 2024 tax credits.
- CFNEIA will track Endow Iowa eligible gifts made during the remainder of 2023. Beginning in January 2024, CFNEIA will distribute the 2024 Endow Iowa application to donors who made an eligible gift in 2023. This process will proceed the application being open for gifts made in 2024.
- Beginning July 1, 2023, applications must be submitted within 12 months of the date of the donation.
- The maximum credit per taxpayer is $100,000 (or $200,000 per couple). This reduction from the prior limit of $300,000 per taxpayer (or $600,000 per couple) was implemented on January 1, 2023.
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.