Endow IA Tax Credit
Innovative opportunities for charitable giving are now available to donors through a program created by Iowa legislation in 2005 called the Endow Iowa Tax Credit Program.
Endow Iowa was created to enhance the quality of life for the citizens of this state through increased philanthropic activity by encouraging contributions from individuals, businesses, and organizations to new and existing community foundations. Click on this link for our Endow Iowa Flier.
With Endow Iowa, you can give and receive.
When you donate to a permanently endowed fund at a qualified community foundation, you’re not only helping your neighbors today—you’re building a stronger community tomorrow. And while that in itself is rewarding, with Endow Iowa, you’ll also get back for giving.
With Endow Iowa, you’re eligible to receive a 25% tax credit on your State of Iowa income taxes. The tax credit is in addition to any federal tax benefits you may qualify for.
Charitable gifts must be made:
- 1. ) To a “qualified” community foundation (the Siouxland Community Foundation and its affiliate community foundations are “qualified” community foundations that meets National Standards).
- 2. ) To a permanently endowment fund (existing or newly established) within the Siouxland Community Foundation. Start an endowment fund for as little as $5,000.
- 3. ) For the benefit of one or more Iowa charitable causes.
- 4. ) By Iowa income taxpayers – individuals, corporations, or financial institutions.
The tax credit:
- 1. ) Cannot be used against prior year’s taxes. Iowa taxpayers may use the tax credit the year of receipt of the tax credit letter from the Iowa Economic Development Authority. Excess credit may be carried forward for up to five years. Effective July 1, 2023, applications must be submitted within twelve months of the date of the gift.
- 2. ) Is issued on a “first come, first serve” basis until the yearly appropriation limit is reached. If the current year’s tax credits have been exhausted, qualified donors are put on a waiting list for next year’s credits. Effective July 1, 2023, the Iowa Economic Development Authority will discontinue the waitlist process until the waitlist is cleared. To be placed on the waitlist, your gift needs to be received by the Siouxland Community Foundation by June 1, 2023 to allow us time to process it.
- 3. ) Is for 25% of the gifted amount and limited to $100,000 in tax credits per individual (for a gift of $400K), or $200,000 in tax credits per couple (for a gift of $800K), if both are Iowa taxpayers (this is a change that became effective January 1, 2023).
- 4. ) 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. 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. We recommend consulting with your tax professionals.
- With Endow Iowa, donations to community foundations cost donors less.
Tax Credit: $125
Federal Deduction: $175
Total Tax Savings: $300
Total Cost of Gift: $200
Tax Credit: $1,250
Federal Deduction: $1,750
Total Tax Savings: $3,000
Total Cost of Gift: $2,000
*Based on 35% marginal federal tax rate