Beginning with tax years ending on or after December 31, 2025, the Illinois Gives Tax Credit Act introduces an income tax credit for taxpayers who contribute to a permanent endowment fund during the taxable year.
Eligible endowment funds must be maintained by Qualified Community Foundations (QCFs), which must receive approval from the Illinois Department of Revenue (IDOR) before accepting contributions that qualify for the tax credit or issuing Certificates of Receipts (CORs) to donors.
What is a Permanent Endowment Fund?
A permanent endowment fund is a financial fund intended to last indefinitely. The principal donation remains intact, while only the investment earnings are used to support charitable projects or provide operational funding. Aside from investment purposes, the foundation managing the fund cannot use the principal donation or proceeds from liquidated assets. Earnings generated from the investments are used to support the foundation's initiatives.
Eligibility Requirements for the Illinois Gives Tax Credit Program
To qualify, the permanent endowment funds must meet the following criteria:
- Provide charitable grants exclusively for the benefit of Illinois residents or charitable projects and organizations within the state.
- Be maintained in perpetuity.
- Adhere to an annual spending policy, with a spending rate not exceeding 7%.
- Not operate as donor-advised funds.
Credit Amount and Limitations
Taxpayers approved to participate in the Illinois Gives Tax Credit Program are eligible for a state income tax credit equal to 25% of their total qualified contributions made to one or more permanent endowment funds held by QCFs during the taxable year. The maximum credit available per taxpayer is $100,000 per year.
Credits are awarded on a first-come, first-served basis, with 25% of the annual credit allocation reserved for contributions classified as “small gifts.” A “small gift” is defined as a contribution of $25,000 or less.
If 75% of the total eligible contributions for a given year are made as “large gifts” (over $25,000), additional large gift applications will not be accepted, except in cases where the total credit cap for the year has not yet been reached. Only small gifts will be accepted at that point.
How to Apply for Approval
Taxpayers must have a MyTax Illinois account to apply for approval to participate in the program. Applications are submitted online through the MyTax Illinois portal. Taxpayers who do not yet have an account are encouraged to create one as soon as possible to avoid processing delays.
Approval is granted automatically if program thresholds have not been met. When applying, taxpayers must designate the Qualified Community Foundation to which they intend to contribute.
Once approved, IDOR issues a Contribution Authorization Certificate (CAC) to the taxpayer. The taxpayer then has 10 business days to provide the contribution to the selected QCF in order to maintain eligibility for the tax credit.
How to Claim the Credit
After receiving a taxpayer’s contribution, the QCF must confirm the contribution within 30 business days. Once confirmed, a Certificate of Receipt (COR) is automatically generated and issued to the taxpayer through MyTax Illinois.
The taxpayer must claim the credit on their tax return for the year in which the contribution was made, even if they have no tax liability for that year.
Joint Tax Returns
For taxpayers filing jointly, each spouse may claim up to $100,000 in credits for contributions they personally made, with a combined maximum of $200,000 per joint return.
Credit Refundability and Carryforward
The Illinois Gives Tax Credit is non-refundable, meaning it cannot result in a tax refund if the credit exceeds the taxpayer’s liability. However, unused credits may be carried forward to offset tax liability for up to five subsequent tax years. Credits are applied to the earliest year with a tax liability but cannot be carried back to previous years.
For more information please visit the Illinois Department of Revenue site: Informational Bulletin FY 2025-14 December 2024