Tax Credit Legislation
Update: 1/23/2025 Rep. Bob Heaton (R) has filed HB 1544 for the 2025 Indiana Legislative Session, and it has been assigned to the House Committee on Ways & Means. This legislation, which would provide a tax credit for donations to a public school foundation, is co-authored by Rep. Tonya Pfaff (D), David Heine (R), and Carey Hamilton (D). The bill provides a 25% state tax credit for contributions made to a public school foundation for taxable years beginning after December 31, 2025, and before January 1, 2028. It provides that the amount allowable as credit in a taxable year may not exceed: (1) $1,000 inthe case of an individual filing a single return or a corporation: or(2) $2,000 in the case of a married couple filing a joint return. The bill provides that the maximum amount of credits that may be awarded in a state fiscal year may not exceed $1,000,000. The legislative committee is hopeful that the bill will receive a hearing. At this time, we encourage our members to continue to promote the great things your foundations are doing to enrich public education and create awareness that these opportunities for Indiana students would not be possible without foundation funding. We also encourage you to include your representatives on your foundation eNewsletter lists, invite them to events, attend their local legislative advocacy events, and follow them on social media (hopefully they'll follow you back!). Please contact Krista at krista@inapef.org if you or a member of your board of directors has a personal relationship with any members of the House Ways & Means Committee, if you have not already done so. |
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Tax Credits Explained
What is a Tax Credit? According to the IRS website, "tax credits provide a dollar-for-dollar reduction of your income tax liability." This means that a $1,000 tax credit saves you $1,000 in taxes. On the other hand, tax deductions lower your taxable income and they are equal to the percentage of your marginal tax bracket. For instance, if you are in the 25% tax bracket, a $1,000 deduction saves you $250 in tax. | Tax Credits vs Tax Deductions
Tax credits is differ from tax deductions. A tax credit is always worth more than an dollar-equivalent tax deduction, because deductions are calculated using percentages. Referring to the numbers on the left, you can see that a $1,000 credit offers $750 more in savings than a $1,000 deduction." | How Tax Credits Benefit your Foundation Being able to offer tax credits could increase the donation amounts you receive and bring in new donors who are interested in lowering their income tax liability. There are donors who specifically seek tax credit opportunities because of the additional savings that they provide. |