New Illinois Charitable Tax Credit: Donate Early to Maximize Benefits in 2025

The Illinois Department of Revenue has introduced the Illinois Gives Tax Credit Act, effective for tax years ending on or after December 31, 2025. This initiative offers a 25% state income tax credit to individuals and businesses that contribute to qualified permanent endowment funds.

To be eligible, contributions must be made to endowment funds managed by Qualified Community Foundations (QCFs) approved by the Illinois Department of Revenue (IDOR). These funds are designed to provide charitable grants exclusively benefiting Illinois residents or supporting charities and projects within the state. It’s important to note that donor-advised funds do not qualify for this program.

The program has an annual statewide cap of $5 million in total tax credits. Given this limitation, interested donors should act soon to secure their credit. The process involves applying through MyTax Illinois to make a contribution, receiving a Contribution Authorization Certificate (CAC) from the Department of Revenue, and completing the donation within 10 business days of receiving the CAC. Subsequently, the QCF will confirm receipt and issue a Certificate of Receipt (COR) through MyTax Illinois, which allows the donor to claim the tax credit on their state income tax return.

This tax credit provides a significant incentive for taxpayers to support local charitable initiatives, enhancing the impact of their contributions while reducing their state tax liability. However, due to the $5 million cap, it’s advisable for potential donors to initiate the application process early to ensure availability of the credit.

For more detailed information and to begin the application process, visit the Illinois Department of Revenue’s official website.