Act Fast: Tax Credit Available July 1

How can you increase the tax benefit of your charitable giving?

The Endow Kentucky Tax Credit provides a state tax credit for gifts to endowed funds held by qualified community foundations.  Each year, Kentucky allocates a credit pool of up to $1 million for qualifying gifts made by Kentucky taxpayers.  You must act fast to receive the credit – applications are accepted starting July 1 and the pool is often exhausted by the end of July.

The Endow Kentucky Tax Credit was introduced in 2011 with a $500,000 credit pool and was increased to $1 million in July 2016.  Kentucky taxpayers can receive a tax credit of 20% of charitable gifts to a permanent endowment fund of a qualified community foundation (limited to $10,000 per Kentucky taxpayer).  The credit is not refundable, but can be carried forward up to five years.  This credit is in addition to federal and state income tax deductions for charitable contributions.

To apply for the credit, taxpayers must file a one-page application with the Kentucky Department of Revenue prior to making the gift.  This application can be filed as early as July 1 and taxpayers are strongly encouraged to apply in early July, before the credit is exhausted.  The Department of Revenue then issues a preliminary approval for the gift, after which the gift is made to the community foundation.  After payment is received by the foundation, the foundation will confirm it and the Department of Revenue will issue final tax credit approval.

Community foundations use these gifts to support Kentucky-based public charities by making annual distributions to the organizations.  These gifts help to ensure the long-term support of these organizations and allow families and businesses to make enduring gifts to organizations they care about.