The Montana Qualified (Endowment) Tax Credit was established by the Montana Legislature in 1997 to encourage individuals, businesses and organizations to make lasting investments in their communities by giving to qualified endowments such as the Community Foundation Fund for the Future. Montana is one of only four states to provide an endowment tax credit program.
The law is set to expire on December 31, 2019, but is expected to be extended. The law provides for:
- Planned Gifts — Credit against state income-tax liability in the amount of 40 percent of the present value of any planned gift to a permanent endowment of a Montana charity, up to a maximum amount of $10,000 per year per taxpayer ($20,000 for joint filers). Individuals and joint-filing taxpayers are required to convey their gifts through a planned gift. Gift annuities, charitable trusts and estate gifts all fall under the definition of a planned gift. Charitable gift annuities, in most cases easily established, are the most often-used planned gift for this purpose.
- Outright Gifts — Credit against state income-tax liability in the amount of 20 percent of the present value of any outright gift by a business entity to a permanent endowment of a Montana charity, up to a maximum of $10,000 per year per taxpayer. Only corporations, small business corporations, partnership or limited liability company taxpayers may give gifts of cash.
Simply put, the credit allows donors to pay less in Montana state income tax when they make an irrevocable planned gift to qualified Montana charitable endowment such as “The Fund for the Future.”
Planned gifts are a way of giving that allows donors to maintain access to income during their lifetime, provide estate and tax-planning tools and build permanent wealth for the Community Foundation to continue its mission. A planned gift held at the Community Foundation can provide a legacy to a particular organization or interest area held dear by a donor.
By providing a permanent legacy gift to the community and causes you and your family care about, you can create significant tax savings for yourself or your business.