In 2011, N.D. legislators passed a bill that allowed a very generous tax credit to those who make a charitable gift to a N.D. qualified endowment. If you are a North Dakota resident and make a gift of $5,000 or more to a N.D. qualified endowment, you are eligible for a 40 percent tax credit on your N.D. taxes. Tax credits are much different than a tax deduction because they reduce your tax liability dollar for dollar. The maximum tax credit allowed is $20,000 for individuals or $40,000 for married couples filing jointly. However, credits may be carried forward up to three years.
The following is an example of how tax credits may benefit you:
Gift Amount | $5,000 | $25,000 | $50,000 |
*Federal tax savings | $1,250 | $6,250 | $12,500 |
ND state income tax credit | -$2,000 | -$10,000 | -$20,000 |
Net "Cost" of gift | $1,750 | $8,750 | $17,500 |
*Based on individuals that fall in the 25 percent Federal tax bracket. Please consult your own financial or tax advisor for your unique situation.