ND 40% Income Tax Credit

ND Tax Credit Makes Major Gifts More Affordable For Donors

People donate for many notions. Two common reasons are to be part of something great, and to make a difference in the lives of others. Did you ever wish you could afford to make a larger financial gift? In 2007, North Dakota State Legislative Assemblies made it easier for individuals and businesses to support the charity of their choice by introducing a 40 percent state tax credit.

An individual or couple is eligible to receive a 40 percent tax credit by making a gift of $5,000 or more (lump sum or aggregate in one calendar year) to a qualified ND endowment. The individual will receive a tax credit of 40 percent of the gift up to a maximum credit of $10,000 per year for single taxpayers or $20,000 per year for a couple filing jointly. For example: a taxpayer who files single donates $25,000 to CHI St. Alexius Health Bismarck Foundation and he or she designates it for CHI St. Alexius Health Bismarck’s Endowment Fund, he or she is eligible to receive a $10,000 state income tax credit.*

The best part about the income tax credit is that it costs you less to donate as you save on both the federal level and on the state level. For example, here are the savings for different gift values for a taxpayer in the 33 percent tax bracket.

Gift amount
Federal tax savings**
N.D. state income tax credit
Net cost of gift
$ 6,750

For individuals who prefer to make a planned gift (charitable remainder trust, charitable gift annuities, life insurance policies, etc.) to a qualified N.D. endowment, they too can benefit from the 40 percent income tax credit. Similar to the endowment credit above, the tax credit is 40 percent of the charitable deduction allowed by the IRS up to a maximum credit of $10,000 per year per taxpayer filing single or $20,000 per year per couple filing jointly.

Businesses (C corporations, S corporations, partnerships, estates, limited liability companies, trusts and financial institutions) also qualify for a 40 percent income tax credit up to a maximum credit of $10,000 for contributions made to a qualified N.D. endowment. For example, say Widgets Etcetera Inc., a C corporation, donates $25,000 to CHI St. Alexius Health Bismarck’s Endowment Fund. Widget Etcetera will receive the full $10,000 income tax credit. In the case where a pass-through entity makes the donation, this credit amount flows through to the owners on a pro-rata basis and is allowed in addition to the individual credit limits listed above.*

As you can see, making a difference in the healthcare of our community is more beneficial than ever before. By gifting to CHI St. Alexius Health Bismarck’s Endowment Fund, you impact the health and wellness in our region now and in the future.

For more information on the 40 percent N.D. income tax credit, please consult with your tax advisor. If interested in learning more about CHI St. Alexius Health Bismarck’s Endowment Fund please contact Foundation at 701-530-7065.

* The credit is a nonrefundable credit requiring a state tax liability to be utilized. If the entire credit cannot be used in the year of the gift, the unused portion may be carried over and used on subsequent tax years’ returns for up to three years.

**Assuming the taxpayer uses the itemized deduction method. This deduction amount is added back at the state level before calculating the state credit.

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