During the 2010 legislative session, the Idaho Legislature passed two bills that significantly enhance the income tax credits for donations to Idaho schools and other organizations, and in 2016 made it permanent.
Legislation clarifies that contributions to nonprofit foundations, located in Idaho, qualify for additional tax credits
As illustrated in the example below, the tax credit equals 50% of the contribution and is limited to a maximum of 50% of an individual taxpayer’s total Idaho income tax liability. Keep in mind that a credit should not to be confused with a tax deduction. A credit translates to a credit towards what you would owe on your state income taxes. The maximum annual amount of the credit was increased from $100 ($200 on a jointly filed return) to $500 ($1,000 on a jointly filed return).
DID YOU KNOW?
Idaho tax laws now allow for a larger tax credit for contribution to schools by any Idaho resident. Married couples may receive up to a $1,000 Idaho state tax credit and corporations may receive up to a $5,000 Idaho state tax credit. The following are examples that illustrates the potential tax savings available to donors for contributions made in 2011:
Single |
|
| Donation | $1,000 |
| Federal Tax Deduction | 280 |
| State Tax Deduction | 78 |
| State Tax Credit | 500 |
| Total Cost of Donation | $ 142 |
Married Filling Jointly |
|
| Donation | $2,000 |
| Federal Tax Deduction | 560 |
| State Tax Deduction | 156 |
| State Tax Credit | 1,000 |
| Total Cost of Donation | 284 |
Corporation |
|
| Donation | $10,000 |
| Federal Tax Deduction | 3,500 |
| State Tax Deduction | 760 |
| State Tax Credit | 5,000 |
| Total Cost of Donation | $ 740 |
Examples are based on a single and married filing jointly tax bracket of 28% and a corporate tax rate of 35%. Consult your accountant or tax preparer for questions regarding your specific tax situation. Additional restrictions and credit limitations may apply.
Another Example:
A husband and wife file a joint income tax return in which they itemize their deductions. Their taxable income (after deductions) is between $17,000 and $68,000. They decide to contribute $1,000 to a local school.
As a result of being able to deduct the contribution, their federal and state income taxes are reduced by $228. (Savings may be more or less depending on their income tax bracket.) In addition, their Idaho income tax credit saves them another $500 (50% of the $1,000 donation). As a result, the $1,000 donation to the school would only be a net costs of $272. Please note that people who do not itemize their deductions would not realize the $228 tax savings, but would still get the $500 credit.
Donate online or fill out the Donation Form and send it to the address shown. You will receive a receipt for your taxes.
For further questions on this tax credit, consult with your tax advisor.