By Quinn Harris, CPA, Partner, and Jing Xu, CPA – Senior Manager
A new Illinois income tax credit is now available for tax years ending on or after December 31, 2025 through December 31, 2029. The “Illinois Gives Tax Credit Act” provides a 25% tax credit to taxpayers who make qualified contributions to a permanent endowment fund held by a Qualified Community Foundation (QCF). Below is a brief overview of how the program works and how you can benefit.
KEY HIGHLIGHTS OF THE ILLINOIS GIVES TAX CREDIT
1. Credit Amount and Limit
- You can receive a credit equal to 25% of the total qualified contribution.
- The maximum credit is $100,000 per taxpayer per year (i.e., you may contribute more but the credit is capped).
- Credits can be carried forward for five years if they exceed your tax liability.
2. Annual Program Caps
- Illinois Department of Revenue (IDOR) can issue up to $5 million in tax credits annually.
- Credits are awarded on a first come first served basis. Additionally, 25% of the annual credit amount is reserved for contributions considered “small gifts,” which are defined as gifts of $25,000 or less. This means that only “small gifts” contributions will be accepted for credit for the balance of the year if 75% of the total eligible contributions approved were for gifts larger than $25,000.
- Each QCF can receive a maximum donation amount of $3 million per calendar year.
3. Application Process
Step 1: Apply online through your MyTax Illinois account, selecting the QCF you wish to support. Approval is automatically granted as long as the annual $5 million credit pool is available.
Step 2: Once approved, IDOR will issue you a Contribution Authorization Certificate (CAC). You then have 10 business days (or until December 31, whichever is sooner) to make your donation to the specified QCF.
Step 3: The QCF must confirm receipt in its MyTax Illinois account within 30 business days.
Step 4: After confirmation, a Certificate of Receipt (COR) is automatically created in your MyTax Illinois account. You must claim the credit on your income tax return for that same year.
4. Qualified Community Foundations (QCF) AND Permanent Endowment Funds
- A QCF must:
– Be a 501(c)(3) nonprofit meeting Community Foundations National Standards
– Apply and be approved by IDOR before accepting donations for this credit
– Reapply annually to remain eligible - A permanent endowment fund:
– Is held in perpetuity (the principal is not spent; only earnings/fund growth may be used)
– Provides charitable grants benefiting Illinois residents, charities, or charitable projects in Illinois
– Is not a donor-advised fund
– Has an annual spending rate not exceeding 7% of total assets
WHY CONSIDER THIS CREDIT?
- It’s a significant opportunity to maximize the impact of your charitable giving while receiving a valuable credit against your Illinois income tax.
- By supporting local charitable causes through a Qualified Community Foundation, you help ensure that your donation has a lasting impact on Illinois communities.
NEXT STEPS
- Explore QCF Options – Check which community foundations qualify under the new program.
- Consult With Us – Before finalizing your charitable strategy, we can help you determine how this credit fits into your broader tax and philanthropic planning.
- Plan Ahead – Because there is a $5 million statewide cap each year, you’ll want to apply and contribute as early as possible if you plan to make a large donation.
If you would like to discuss how the Illinois Gives Tax Credit Program can benefit your philanthropic and tax strategy, please reach out to your MichaelSilver trusted advisor at 847-982-0333. We are here to help guide you through the process and ensure that you maximize all of the available tax benefits.
Quinn Harris, CPA, Partner, has over 15 years of experience in high-level tax advisory and compliance roles. His professional journey reflects a commitment to excellence and a remarkable ability to navigate and lead through the complexities of tax regulations and business challenges, particularly in the dynamic fields of real estate and private equity. Quinn has been pivotal in directing tax strategy and compliance, spearheading initiatives to integrate tax advisory services with corporate goals and is widely recognized for his aptitude in communicating complex tax issues.
Jing Xu, CPA, – Senior Manager, has over 20 years of experience in tax, accounting, consulting, and compliance serving closely-held businesses and their owners, and high-net-worth individuals. Her primary industry focus includes private and hedge fund investments, international individual compliance and consulting, real estate investments, manufacturing, and professional service providers. Jing earned her Master of Science in Accounting from Northern Illinois University.