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Revenue omnibus includes some little-noticed charitable provisions

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Illinois

* AP budget story…

“There weren’t tax increases or revenue enhancements against everyday ordinary taxpayers,” said Chicago Democratic Sen. Elgie Sims, a budget negotiator. “What you saw was a recognition of, particularly as it relates to the sports betting industry, the explosion of the industry and some parity.”

Sims also pointed out the budget’s tax breaks. The income tax personal exemption will increase from $2,425 to $2,775 for 2024. The 1% sales tax on groceries will be eliminated in 2026. And there’s a new child tax credit for low-income families. Those with at least one child under 12 are eligible for the credit, which is 20% of the Earned Income Tax Credit and 40% next year.

Lots more in there, so read the rest if you have time.

* I received a press release yesterday about a couple of lesser-known budget-related items that were in the revenue omnibus bill…

The Alliance of Illinois Community Foundations (AICF) and Forefront commend the General Assembly for enacting the Illinois Gives Tax Credit Act (“Illinois Gives”) and the Workforce Development Through Charitable Loan Repayment Act (“Loan Repayment”). Both programs were included in the FY25 revenue omnibus (HB4951 / Public Act 103-0592, Articles 170 and 10 respectively). Previously, they generated strong bicameral and bipartisan support with sponsors from every organized Caucus in the General Assembly as SB172 (Feigenholtz)/ HB1241 (Croke) and SB3273 (Villanueva)/ HB4736 (Stuart).

Illinois Gives will incentivize up to $100 million in new charitable giving over the next 5 years by authorizing a 25% state income tax credit for charitable donations to eligible permanent endowments held by dozens of qualified community foundations across Illinois. The program, which begins 1/1/25, includes equity provisions and reporting requirements and will be administered by Illinois Department of Revenue (IDOR).

In addition to Illinois Gives, the new Loan Repayment program will use private charitable dollars to lure and retain locally needed workers into Illinois communities. Eligible community foundations will directly repay part or all of a worker’s student loans directly to the lender, and the worker will not pay state income tax on that charitable loan repayment. State income tax-free loan repayment will become available to workers after 1/1/26, and will be overseen by the Illinois Student Assistance Commission (ISAC) with support from IDOR and AICF.

Endowed funds at community foundations provide a predictable source of general operating and capital funding for a wide range of nonprofit organizations and programs in every part of the state. “By incentivizing endowment gifts through Illinois Gives, we are creating a permanent funding stream to sustain our nonprofits for generations to come,” said Joshua Gibb, AICF President.

Similar tax credit programs in other states increased both the number of donors and total charitable dollars given. “Nonprofit organizations are the heart of our communities all over Illinois, providing vital services and strengthening communities,” said Andrea Sáenz, President and CEO of The Chicago Community Trust.

Changes to federal tax laws since 2017 reduced incentives for charitable contributions, resulting in both fewer donors and donations nationwide. Illinois Gives will help reverse that trend in Illinois. “The Illinois Gives Act leverages four private dollars for every one state dollar, and represents a historic investment in the nonprofit sector, which typically is not included in the General Assembly’s annual revenue package,” said Holly Ambuehl, Director of Policy and Government Affairs at Forefront.

* From the one-pager on the Illinois Gives Tax Credit Act…

• Authorizes a 25% state charitable income tax credit beginning tax year 2025
• To any Illinois taxpayer who makes a charitable gift(s) to a permanent endowment administered by ~40 qualified community foundations in Illinois that serve every county in the state
• Must benefit charitable causes in this state
• Includes a $5 million statewide cap to limit budget impact and a 5-year sunset provision
• May not be carried back and is not refundable; may be carried forward up to 5 years
• Includes public reporting requirements to ensure accountability and transparency

There’s a $100,000 contribution cap and a $5 million program cap.

* Workforce Development Through Charitable Loan Repayment dot points…

• Private sector solution for Illinois workforce needs + Illinois resident student debt
• Targets workforce gaps by matching charitable loan repayment with locally needed workers
• Private charitable donations made to eligible Community Foundations are used to directly repay student debt for workers that agree to live and work in a target geography + industry for a certain amount of time
• SB3273/HB4736 subtracts such charitable loan repayment from state income tax for eligible workers

More here.

posted by Rich Miller
Tuesday, Jun 18, 24 @ 12:28 pm

Comments

It’s a 4.95% flat tax–stop eroding the tax base with dumb ideas.

Comment by ANON Tuesday, Jun 18, 24 @ 12:38 pm
” the retailer must now collect not only the 6.25% state sales tax, but any local option tax that applies at the shipment’s destination.”

I could have sworn this has existed for a long time.

For years it has been one of the other excellent benefits of living in an unincorporated area. No local sales taxes get added onto any of my bills or deliveries, only the state tax. Conversely, I’ve seen many peoples utility bills and Amazon orders which include the local sales tax option based on their address.

Seems like I need to read more about that law, as I’m obviously confused in some way about this being a new law.

Comment by TheInvisibleMan Tuesday, Jun 18, 24 @ 12:40 pm
Seems like tax credits are good for everyone…except private schools. The Illinois Gives tax credit favors charitable giving to certain organizations. I’m having a hard time finding a list of the ~40 orgs that qualify. I wonder how they made the list.

Comment by School Guy Tuesday, Jun 18, 24 @ 2:09 pm
==It’s a 4.95% flat tax==

That’s the problem. It’s a flat tax. And since the graduated tax question didn’t fare well then you either have to raise that flat tax or come up with creative ideas to make the tax more “progressive” so that those have more pay a greater actual percentage in taxes.

Comment by Demoralized Tuesday, Jun 18, 24 @ 2:26 pm
== I’m having a hard time finding a list of the ~40 orgs that qualify. ==

https://allianceilcf.org/locate-a-community-foundation/

Comment by Easy Research Tuesday, Jun 18, 24 @ 2:42 pm
@ Easy Research

Thank you.

Comment by School Guy Tuesday, Jun 18, 24 @ 2:45 pm