Kentucky's Unique Tax Credits Boost Charitable Impact

Kentucky’s Endow Kentucky Tax Credit program is making waves in the nonprofit sector by offering a powerful incentive for charitable giving. 

This innovative initiative provides Kentucky taxpayers, individuals, and businesses with a state tax credit of up to 20% for contributions to endowments benefiting Kentucky nonprofits and schools.

Gifts to qualified community foundations can be eligible for the tax credit and federal and state tax deductions. 

The credit can be applied against individual, corporate, and limited liability income taxes and carried forward for up to five years. Individual donors can receive credits up to $10,000 for gifts of $50,000, while joint filers can claim up to $20,000 for gifts of $100,000.

To participate, donors must submit a single-page application before making their gift. Applications are available at www.revenue.ky.gov from July 1 to 7 each year. 

Due to high demand, the program’s annual allocation of $1 million in state tax credits is typically exhausted within the first week.

The Greater Cincinnati Foundation (GCF) has been a significant beneficiary of the Endow Kentucky Tax Credit program. Since 2011, GCF has helped donors capture $1.7 million in tax credits through over $9 million in endowment gifts, supporting 36 GCF endowments that benefit Kentucky nonprofits.

Laura Menge, a representative from GCF, highlighted the program’s role in enhancing donor contributions and providing enduring community support. 

The tax credits are nonrefundable and nontransferable and can be applied against individual, corporate, and limited liability entity taxes. They are 20% of the endowment gift value, up to $10,000 per taxpayer.

As of December 14, 2023, the entire $1 million allocation for the fiscal year ending June 30, 2024, has been spent, showing the program’s popularity and effectiveness in encouraging charitable giving.

The Endow Kentucky Tax Credit program is a strategic incentive for donors to make lasting contributions, fostering continuous support for Kentucky’s nonprofits and schools.

By using this unique tax credit, donors can amplify the impact of their charitable giving while benefiting from significant tax savings.