Those who give to a permanently endowed fund at a qualified community foundation or affiliate are eligible to receive a 25% state income tax credit for their gift. Donors are also able to take advantage of Endow Iowa tax credits in conjunction with federal tax deductions.
- Effective August 28, 2018, taxpayers who receive Endow Iowa Tax Credits and itemize on their federal tax returns 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 state and local taxes (SALT) Cap. We recommend consulting with your tax professionals.
- For example, a taxpayer that makes a $1,000 charitable donation to Endow Iowa would receive a $250 (25%) state tax credit. When filing federal taxes, the taxpayer cannot deduct the entire $1,000 charitable donation like in the past, but only the difference between the donation and the state tax credit, or $750 in this example.
The maximum annual credit is $300,000 per taxpayer and $600,000 per couple. Credits are not transferable or refundable.
Effective January 1, 2023, the maximum annual credit allowance will be reduced to $100,000 per taxpayer and $200,000 per couple (from $300,000 per taxpayer and $600,000 per couple). Credits are not transferable or refundable.
A charitable gift was made:
- to an endowed fund benefiting a nonprofit or charitable cause in Iowa;
- at a qualified community foundation or affiliate in Iowa; and
The gift was made by:
- an individual, couple, business, corporation, partnership, limited liability company (LLC), S corporation, OR an estate or trust electing to have the income taxed to an individual; and
- the donor has an income tax liability in the State of Iowa; and
The tax credit will be applied to:
- personal income tax, business tax on corporations, and taxes paid by estates and trusts, insurance companies, and credit unions. Please consult a tax professional if you are unsure if the tax credit is applicable to your situation. (Related language from the Iowa Administrative Rules 261—47.3(80GA,HF683): “Allocation of funds 47.3(1) Approved tax credits shall be allowed against taxes imposed in Iowa Code chapter 422, divisions II, III, and V, and in Iowa Code chapter 432, and against the moneys and credits tax imposed in Iowa Code section 533.24.”)