The bill modifies existing tax laws under the Illinois Income Tax Act, stating that taxpayers claiming the endowment gift credit must make corresponding modifications to their adjusted gross income, thereby potentially impacting their overall state tax burden. The act caps the total amount of tax credits awarded in a calendar year to $50 million, with individual caps of $100,000 for any single taxpayer starting from 2024, thus ensuring a controlled expansion of fiscal policy in support of charitable giving. These measures aim to promote philanthropic engagement while aligning with the state's fiscal objectives.
SB0172, known as the Endow Illinois Tax Credit Act, was introduced to incentivize charitable contributions by offering tax credits to individuals and business entities who make endowment gifts to permanent endowment funds. Under the proposed law, taxpayers would receive a credit equal to 25% of their endowment gift. To qualify for this credit, individuals must provide a certificate of receipt for their contribution during the tax year. The intention of the bill is to encourage more substantial and permanent contributions to community endowments, benefiting local organizations and initiatives across Illinois.
Notably, there may be contention surrounding the bill regarding the long-term fiscal implications on state revenues due to the projected loss of tax income from the newly established credits. While proponents argue that it will stimulate additional contributions to local charities and economically impactful endowments, critics may raise concerns about the sufficiency of the funding model for state-supported initiatives, as well as the equity in the distribution of tax credits amongst wealthier taxpayers who can afford to make sizable contributions. The balance between encouraging philanthropy and maintaining robust state revenue streams will likely be a critical point of discussion among legislators.