Endow Iowa Tax Credit
The Endow Iowa Tax Credit was created to enhance the quality of life for the citizens of Iowa through increased philanthropic activity by encouraging new investments to existing community foundations across Iowa.
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 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 professional.
- For example, a taxpayer that makes a $1,000 charitable donation to an Endow Iowa-eligible fund 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.
- Effective January 1, 2023, the maximum annual credit allowance is reduced to $100,000 per taxpayer and $200,000 per couple (from $300,000 per taxpayer and $600,000 per couple).
- Effective July 1, 2023, the Iowa Economic Development Authority will discontinue the waitlist process until the waitlist is cleared. Effective July 1, 2023, applications must be submitted within twelve months of the date of the gift.
- Download an FAQ on the changes to the Endow Iowa Waitlist
Endow Iowa Tax Credit Illustration
Here is what the gift could mean for you:
|Endow Iowa Tax Credit (25%)||(250.00)||(2,500.00)||(25,000.00)||(100,000.00)|
|Net Federal Deductible Gift||$750.00||$7,500.00||$75,000.00||$300,000.00|
|Federal Tax Savings (37%)||(277.50)||(2,775.00)||(27,750.00)||(111,000.00)|
|Net Cost of Gift||$472.50||$4,725.00||$47,250.00||$189,000.00|
* For ease of illustration, the examples above do not factor in the federal/state net tax effect. Examples assume the donor is in the 37% tax bracket and plans to claim a charitable deduction on the federal tax return.