Individuals & Families
A New Way to Give Back and Save: The Illinois Gives Tax Credit
Illinois taxpayers now have access to a new tool that makes charitable giving more rewarding while strengthening nonprofits across the state. The Illinois Gives Tax Credit was signed into law in June 2024 and will provide a 25% state income tax credit to individuals and businesses who contribute to permanent charitable endowments managed by Qualified Community Foundations (QCF).
This program is designed to expand charitable giving beyond those who itemize deductions, creating a fairer system while delivering long-term funding to Illinois nonprofits. If you’re planning your charitable giving strategy, the Illinois Gives Tax Credit may offer an opportunity to both reduce your tax liability and maximize your impact.
How It Works
Starting with the 2025 tax year, Illinois taxpayers—including individuals, corporations, partnerships, trusts, and estates—can claim a 25% state income tax credit for eligible contributions. These gifts must be made to permanent endowments held by one of about 40 qualified community foundations serving every county in Illinois.
- Example: A $10,000 gift to a qualifying community foundation endowment generates a $2,500 Illinois income tax credit.
- Credits are capped at $100,000 per taxpayer per year, with no minimum gift required. The program includes a $5 million annual statewide cap and a five-year sunset provision.
- Credits are non-refundable but can be carried forward for up to five years.
Because the program is capped, it’s likely demand will be high. Taxpayers should plan their giving early in the year to secure available credits.
Quick Start Guide to Applying For and Receiving the IL Gives Tax Credit
To apply and receive an Illinois Gives Tax Credit, follow these instructions:
- Apply to make a contribution to a QCF through MyTax Illinois.
- Receive a Contribution Authorization Certificate (CAC) from the Illinois Department of Revenue through MyTax Illinois.
- Make the contributions to the QCF within 10 business days after receiving the CAC.
- After receiving the contribution, the QCF will confirm receipt within 30 business days and a Certificate of Receipt (COR) will be created and issued to you through MyTax Illinois.
- After receiving a COR, you may claim the credit on your income tax return.
Why This Matters
Historically, only taxpayers who itemized deductions could benefit from a charitable giving tax incentive, and most households don’t itemize. That meant millions of Illinoisans were giving generously without receiving any tax benefit.
The Illinois Gives Tax Credit addresses this inequity. By extending benefits to non-itemizers, the program makes charitable giving more accessible and fair across income levels. It also strengthens local nonprofits by building permanent endowment funds that provide steady, long-term support.
Similar programs in other states have proven successful. For example, Iowa’s Endow Iowa Tax Credit has generated more than $300 million in charitable giving since its launch, with the majority of donors giving less than $1,000. Illinois lawmakers expect this program to leverage about $4 in private donations for every $1 of state investment, directing as much as $100 million to nonprofits over five years.
Equity Provisions
The Illinois Gives Act was designed to spread benefits broadly and equitably:
- 25% of total credits are reserved for gifts under $25,000, encouraging participation from small donors.
- No single community foundation can receive more than 15% of the statewide pool.
- Funds can support any charitable cause in Illinois, from human services and healthcare to arts, education, the environment, and more.
This ensures that both urban and rural communities benefit, and that causes across the nonprofit sector receive support.
Key Donor Takeaways
- Timing matters. With the $5 million cap in place, consider making contributions early in the calendar year to secure your credit.
- Think long-term. Gifts to endowments provide lasting support for Illinois charities while giving you tax relief year after year.
- Broader eligibility. Non-itemizers, as well as individuals and businesses of all sizes, can now benefit from a charitable tax incentive.
- Carryforward flexibility. If you can’t use your full credit in one year, you may carry it forward for up to five years.
Our Expertise, Your Maximized Impact
The Illinois Gives Tax Credit is more than just a new deduction. It’s a chance to align your tax planning with your charitable values. Whether you’re making a modest gift or a significant contribution, this program allows you to amplify your impact while receiving meaningful tax relief.
Check out another recent D+L blog post for more timely tax insights and contact us for more information on how the Illinois Gives Tax Credit can support your donation plans.
D+L: Guiding Your Charitable Plans and Tax Decisions
At Dugan + Lopatka, we’ve spent more than 50 years helping clients navigate changing tax laws and make smart financial decisions. No matter your gift-giving goals, our team is here to help you understand your options and increase both your impact and your tax benefits.
That’s Accounting for What Matters.