THE ILLINOIS GIVES TAX CREDIT ACT IS EFFECTIVE ON JANUARY 1, 2025

The Illinois Gives Act incentivizes charitable giving by Illinois taxpayers, at all income levels, by authorizing a state income tax credit for 25% of gifts to qualified community foundations’ permanent endowments as of 1/1/25. Donor advised funds are excluded. Permanent endowments may fund general operating and program grants to nonprofits, provide stable funding during economic downturns and emergencies, and may be used for loan collateral and capital projects. Any nonprofit may establish a permanent endowment by contacting their local community foundation.

The Illinois Gives Act creates a 25% charitable income tax credit for qualified gifts made to permanently endowed, non-DAF funds at qualified community foundations in Illinois as of 1/1/25. The 103rd Illinois General Assembly included the Illinois Gives Act in a larger FY25 budget bill (HB 4951) when they passed the FY25 budget in May 2024.

• Background:  See 35 ILCS 60 (Public Act 103-0592) and underlying/original bills: HB 1241/ SB172. Visit Illinois Department of Revenue’s landing page. Read more on Forefront’s fact sheet, FAQ, and Press Release; find your local community foundation.
• Community Foundations:  Learn the requirements and register as an eligible community foundation. Track awarded and remaining tax credits.
• Individual Donors:  Read IDOR’s Bulletin and Quick-Start Guide.
  • Create a profile on MyTaxIllinois.gov by clicking “Request a Letter ID” under “Individuals” on the left side of the home page.
  • Once you receive your letter ID by mail (usually within 10 business days or less), logon to MyTax Illinois and select “View more account options” next to your Individual Income Tax account, and then select “Contribute to Illinois Gives.” Record your pledge and submit.
  • IDOR will provide a “contribution authorization certificate” after you submit your pledge within 3 days (usually faster). Download this document. You must provide it to the community foundation when you make your gift.
  • Make the pledged gift to an eligible fund at a community foundation within 10 days. If you don’t know which funds are eligible, ask your community foundation first.
  • The community foundation must issue a certificate of receipt for the tax-credit eligible gift within 30 days. Save this document; you need it to get the tax credit later.
  • Use the certificate of receipt to document your tax-credit eligible gift when you file your income tax return later for the year in which the gift was made.

The Illinois Gives Act in tended to reverse declines in charitable giving and provide a stable source of funding for a variety of nonprofits in Illinois. Nationally, the number of taxpayers taking advantage of the charitable deduction significantly decreased after the passage of the Tax Cuts and Jobs Act of 2017 (TCJA). In Illinois, nearly 1/3rd of respondents to Forefront’s 2024 policy survey reported losing donors and/or dollars since the enactment of the TCJA.

We know charitable giving incentives influence behavior. For example, the temporary federal universal charitable deduction in 2020 and 2021 during the COVID era showed the strong interest in these incentives. The Illinois Gives Act provides an incentive for charitable giving in Illinois to help replace the loss of incentives at the federal level.

Forefront’s policy team is still working with other national partners and our counterparts in other states to restore a federal charitable giving incentive. Sign up for alerts via our action center to receive related updates.