Endow Iowa Update

Jun. 25, 2019

We are privileged to live in a generous state with citizens who have invested in the quality of life we enjoy today through charitable giving. To continue this proud Iowa tradition of giving, the Community Foundation is pleased to be able to offer access to the Endow Iowa Tax Credit program.

As we continue to provide access to this charitable giving resource, there are newly approved IRS regulations which could impact the federal deductibility of Endow Iowa charitable gifts.  These regulations do not impact the federal tax returns of donors who utilize the standard deduction or have made an Endow Iowa qualified gift as an IRA charitable rollover but will affect those who itemize their deductions. 

On June 13, 2019, the U.S. Treasury Department published a regulation titled “Contributions in Exchange for State or Local Tax Credits”. While this new regulation was finalized on June 13th, enforcement of the regulation impacts Endow Iowa qualified gifts made on or after August 28, 2018.

The regulation requires that federal charitable deductions are reduced by the value of any state tax credit received. For example, a taxpayer that makes a $100 charitable donation to an Endow Iowa fund would receive a $25 (25%) state tax credit. With the new regulation, when filing federal taxes, the taxpayer cannot deduct the entire $100 charitable donation as in the past, but only the difference between the donation and the state tax credit, or $75 in this example. Put another way, what was previously a $100 charitable tax deduction is now a $75 charitable tax deduction.

The effect of this change is different for all taxpayers. Due to the complex nature of this regulation, we recommend you consult your tax advisor to better understand its impact on your specific situation.

If you would like to learn more, please contact Lynne Yontz, chief charitable giving officer, by email at yontz@desmoinesfoundation.org or by phone at (515) 447-4203.