Beginning in 2025, the Illinois Gives Tax Credit Act is designed to encourage charitable giving by offering eligible donors a state income tax credit. To provide clarity on how the program works and its benefits, we spoke with Dustin Courson, CPA, at Courson & Associates, LLC., about what donors should know when considering participation.
Q. What is the Illinois Gives Tax Credit?
- A: The Illinois Gives tax credit is a non-refundable Illinois state income tax credit equal to 25% of a donor’s qualified contributions to a permanent endowment fund held by a Qualified Community Foundation, such as Galesburg Community Foundation.
Q. How is this different than a traditional charitable tax deduction?
- A: A federal charitable deduction lowers taxable income, and the value of the deduction depends on your tax bracket. The Illinois Gives Tax Credit is different because it’s a state tax credit – it reduces the amount of state tax you owe, dollar for dollar. Credits are generally more valuable than deductions for this reason.
Q. Can you give a simple example of how a donor would benefit from the credit?
- A: If a donor makes a $1,000 gift to an eligible endowment fund at Galesburg Community Foundation, they are eligible to receive a 25% state income tax credit—equal to $250. So, while they contribute $1,000, the actual out-of-pocket cost is only $750. One thing to keep in mind though: this is a non–refundable credit. If your Illinois state tax liability is less than the credit, you can only claim the credit up to the amount of your tax liability for that year. Any unused portion can be carried forward for up to five additional tax years.
Q. Is there a cap on how much credit a donor can receive?
- A: Yes. The maximum credit per individual is $100,000, which corresponds to a $400,000 qualified charitable gift. For married couples filing a joint return, each spouse may claim up to $100,000 of credit on gifts they personally make, for a combined maximum of $200,000. In addition, the state caps the total credits it awards each year at $5 million statewide.
Q. What types of donors or situations are best suited for taking advantage of this tax credit?
- A: This would benefit anyone that is charitably inclined and has Illinois state tax liability.
Q. How does this tax credit encourage local giving?
- A: The great benefit of Illinois Gives is that the state essentially funds 25% of your gift, and that gift can stay right here in our region! Plus, because the gifts are made to permanent endowments, they’ll continue supporting local causes forever.
Q. What steps should a donor take if they’re interested in making a gift and applying for this tax credit?
- A: Start by contacting Galesburg Community Foundation, or speak with your tax professional or financial advisor. You must first apply through MyTax Illinois for a Contribution Authorization Certificate (CAC). After the CAC is issued, you have 10 business days to complete your gift. Once the Foundation confirms receipt, a Certificate of Receipt (COR) will be posted to your MyTax Illinois account, and you will use that document when you file your tax return to claim the credit.
Q. If someone was on the fence about using it, what would you tell them?
- A: I’d encourage them to take a closer look at the over 70 eligible endowment funds at Galesburg Community Foundation—or even think about starting their own fund for a cause they care about. If you’re passionate about making a lasting impact and you have Illinois tax liability, this is a significant opportunity worth considering.
To learn more about Illinois Gives and to view a full list of our eligible endowment funds visit yourgcf.org/ilgives, or contact Sarah Grant, Director of Development.
