Getting Ready for the Illinois Gives Tax Credit Act
The Illinois Gives Tax Credit Act took effect January 1, 2025. Learn about this new tax credit available to Illinois taxpayers and how it benefits your tax liability, nonprofits, and the people and places of Illinois!
Info for our donors regarding the Illinois Gives Act:
Taxpayers (including individuals, joint filers, corporations, partnerships, trusts, and estates) that intend to donate may prepare by completing these 3 steps now:
- Read the IDOR Bulletin and Quick-Start Guide
- Create a MyTaxIllinois profile by requesting a letter ID. Once requested, IDOR will mail you a hard-copy letter within a few business days with your ID.
- Once you receive the Letter ID, return to MyTaxIllinois.gov to create your MyTax profile so that you can apply to receive the tax credit after January 1.
- Contact Missy Batman at 217-429-3000 or mbatman@heartofillinois.org to notify the HICF you plan to participate in the program and make a gift AFTER 1/1/25.
- Once you've established your MyTax Illinois login, utilize this pdf for guidance thru the next steps.
- Apply to make a contribution to the Community Foundation of Macon County (we are still listed by our prior name), your Qualified Community Foundation (QCF) through MyTax Illinois.
- Receive a Contribution Authorization Certificate (CAC) from IDOR through MyTax Illinois.
- Make the contribution(s) to the Community Foundation of Macon County within 10 business days after receiving the CAC.
- After receiving the contribution(s), we will confirm receipt within 30 business days and a COR will be created and issued to you through MyTax Illinois.
After receiving a COR, you may claim the credit on your next income tax return.
Illinois Gives Tax Credit Rewards Donors with a 25% Income Tax Credit - Effective January 1, 2025
What is the official name of the legislation?
Illinois Gives Tax Credit Act
HB4951/Public Act 103-0592, Article 170
What does it do?
Provides a 25% State of Illinois charitable income tax credit to donors who contribute to an endowed fund at a community foundation in Illinois that is in compliance with National Standards.
Is this a federal tax credit?
No, only for Illinois income tax.
Who qualifies as a “donor”?
Any Illinois taxpayer, including individual and joint filers, corporations, partnerships, trusts, and estates can make an eligible gift to an eligible institution.
Do I have to be an Illinois resident?
No, as long as you pay Illinois income tax.
What is an “eligible gift”?
A donation to an endowed fund to benefit an Illinois charitable cause at a Qualified Community Foundation. The Community Foundation of Macon County, dba as Heart of Illinois Community Foundation is a qualified community foundation with the Illinois Department of Revenue.
What assets can be gifted?
Any asset that a community foundation already accepts per that CF’s Gift Acceptance Policy.
What is an “endowed fund”?
A fund where the principal is held in perpetuity and the income is used for grantmaking.
What types of funds can be endowed?
"Eligible” endowments include designated, field of interest, scholarship, and agency/nonprofit funds for an Illinois nonprofit.
Are donor advised funds included in “eligible” endowments?
No.
Can a donor create a new endowed fund at the HICF to be the recipient of these eligible gifts?
Yes. A donor can choose to donate to an existing endowment or create a new endowed fund for an Illinois nonprofit that is designated to a specific Illinois nonprofit (designated fund), dedicated to an issue of concern (field of interest fund), or a scholarship that they design.
What is an agency endowment?
A designated endowment is created by a donor – an agency endowment is created by the nonprofit who is setting it up to be a permanent, long-term source of income. The public is welcome to donate to any agency endowment at the HICF and apply for the tax credit.
Does HICF have its own operating endowment?
Yes, it’s called the HICF Operating Endowment. This endowment is eligible to receive gifts within this new legislation.
What is National Standards?
Community Foundations National Standards® (National Standards) is an accreditation program for community foundations. They are peer-driven, voluntary, and self-regulatory. National Standards accreditation represents operational effectiveness to foster excellence in community philanthropy. The Heart of Illinois Community Foundation is accredited in National Standards.
Are there limits or caps on the credit?
Yes. The cost to the State of IL is capped at $5 million. The maximum tax credit per filer is $100,000, but to receive that tax credit, you’d have to donate $400,000 because it’s a 25% credit. The program is limited to supporting causes and programs in Illinois and cannot be used to support causes in other states; this keeps Illinois dollars circulating in the Illinois economy. Finally, the program will sunset after 5 years (at the end of 2029) unless it is extended beyond that date by the IL General Assembly.
Can one community foundation's donors claim the entire $5 Million?
No. IL Gives Act caps the amount any one community foundation may receive at 15% of the total, which is intended to ensure that rural areas and areas with less community wealth are able to benefit. At its maximum potential, this may generate $3 million in additional private donations per year for any single community foundation. Especially in rural areas, this can make a sizeable difference.
How are these donations documented?
This is still a work in process, but any gift to any community foundation is already documented and the donor receives a charitable tax receipt, which includes the date of the gift and the fact that no goods or services were provided in exchange for the gift. The Illinois Department of Revenue will be creating the paperwork and process for donors to claim this 25% income tax credit. HICF will be sharing updates as they occur between now and January 1st.
Can these endowed funds benefit charities outside of Illinois?
No. Each endowed fund that receives gifts eligible under this Act must award grants to charities for their operations and programming that occur within the State of Illinois.
Are ALL charitable gifts to ANY charitable organization eligible for this tax credit?
No. Only gifts to non-DAF (Donor Advised Fund) permanent endowments at IDOR approved community foundations are eligible to get the state tax credit (until we reach the statewide cap of $5M). Gifts to other charities, private foundations, and family foundations are not eligible for this tax credit.
We will continue to post updates as we learn them.
