The Illinois Gives Tax Credit Program gives both individuals and businesses a powerful tax incentive to improve their communities. The program offers Illinois taxpayers the opportunity to earn a 25% income tax credit by contributing to permanent endowment funds held by Qualified Community Foundations (QCFs).

Qualifying for the program requires a MyTax Illinois account. Sign up for one if you haven’t already.

What is the Illinois Gives Tax Credit Act?

Enacted in 2024, the program gives individuals and businesses a 25% income tax credit for contributing to permanent endowment funds held by QCFs. QCFs and permanent endowment funds each have their own set of qualifications that must be followed.

Qualified Community Foundation Requirements

For a QCF to qualify for the program, it must:

• Be a 501(c)(3) tax-exempt organization and be approved by the IDOR before accepting contributions eligible for the tax credits under this program, and
• Provide charitable grants exclusively for the benefit of Illinois residents or for charities and charitable projects located in Illinois, and
• Reapply to the Illinois Department of Revenue (IDOR) on an annual basis in order to be eligible to confirm receipts of donations and issue Certificates of Receipt (CORs) to contributors.

Permanent Endowment Fund Qualifications

To qualify for the IGTC Program, the permanent endowment fund must:

• Provide charitable grants exclusively for the benefit of residents of Illinois or for charities and charitable projects located in Illinois,
• Exist in perpetuity,
• Have an annual spending rate based on the foundation spending policy, not to exceed 7%, and
• Not be a donor advised fund.

Credit Availability

Although credits are awarded on a first-come, first-served basis, 25% of the annual credit amount is reserved for “small gift” contributions. For the purpose of the program, “small gifts” are considered gifts of $25,000 or less. Keep the following maximum donation limits in mind as you plan your gift giving:

• For the maximum donation amount, $20 million, IDOR can issue up to $5 million in tax credits per calendar year.
• The maximum donation amount for a single eligible taxpayer is $400,000. IDOR can issue up to $100,000 in tax credits per taxpayer per calendar year.
• The maximum donation amount that can be made to a single QCF and still be eligible under this program is $3 million, which allows IDOR to issue up to $750,000 in tax credits per calendar year.
• The “large gift” maximum donation is $15 million, equating to $3.75 million in tax credit.

How to Qualify

If you have an active income tax account, taxpayers can apply online to make contributions through the free online tax portal, MyTax Illinois. As long as the donation thresholds outlined in the program have not been met, approval is automatically granted. Taxpayers choose the QCF when applying for the credit.

Once approved for the credit, the taxpayer will receive a Contribution Authorization Certification (CAC). These began to be released on January 1, 2025.

Claiming the Tax Credit

Once the taxpayer receives the CAC, they have 10 business days to provide the QCF of their choice with their contribution to earn a valid credit. If your CAC is requested with less than 10 business days left in the year, the QCF must receive your payment by December 31 to be eligible. Once they receive your contribution, the QCF will issue you a Certificate of Receipt (COR) within 30 business days.

Once you receive a COR, you must claim the credit on that year’s income tax return regardless of whether you have an income tax liability or not that year.

Example: An individual files an application with the intention of contributing $100,000 to an IDOR registered QCF. As long as the foundation hasn’t met its maximum donation limit, $3 million in donations for that year, or if the donation wouldn’t make the “large gift” donation total exceed the maximum, the taxpayer will receive a CAC from IDOR authorizing the $100,000 contribution, equating to a $25,000 tax credit.

Other factors to consider:

• Individuals who file joint returns are allowed to each claim up to $100,000 in credit, not to exceed $200,000.
• While taxpayers can’t receive a refund for unused tax credits, any amount that exceeds your tax liability for the year in which you claimed the credit can be carried forward for five subsequent taxable years.
• Income tax credits are applied to the earliest year in which there is a tax liability but cannot be carried back to a tax year prior to the issuance of the CAC.
• You can apply for a CAC for a donation you already made, but the donation and the CAC must be in the same calendar year. Please note – contributing before applying for a CAC doesn’t guarantee you an income tax credit. There are multiple factors that can result in a donation not being eligible for the credit:
  • The donor has already earned the maximum amount of Illinois Gives tax credits
  • The QCF has reached its maximum amount of eligible contributions
  • The program has met its tax credit limit
• A combined filing group, for the purpose of this program, is considered one taxpayer and is subject to the $100,000 tax credit cap per combined return, not per each individual member. Members of a combined filing group will be treated as one taxpayer for purposes of any return or amended return.

Taking advantage of this opportunity requires careful planning and strategic insights. Anders Tax Advisors can work with you to determine whether this tax credit, or another, would be a good fit into your financial plan for 2025 and 2026.

Learn more about how our advisors can help you explore your options to lower your tax liability, and the associated cost, by requesting a meeting below.