Individual income tax: credit; credit for donations to endowment fund of community foundations; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding sec. 261.
This legislation is set to enhance charitable giving to community foundations by providing a financial incentive for taxpayers. The potential implications of this tax credit include increased funding for local foundations that support various community initiatives. By facilitating contributions to these foundations, SB0132 aims to support local development and charitable activities, thereby fostering a stronger sense of community engagement and philanthropy within Michigan.
Senate Bill 132 (SB0132) proposes an amendment to the Income Tax Act of 1967 in Michigan, introducing a tax credit for contributions made to endowment funds of community foundations. The bill stipulates that, for tax years commencing January 1, 2025, a taxpayer can claim a credit equivalent to 50% of the amount contributed during the year, subject to defined limits. Individuals can claim a maximum credit of $100 or $200 for joint returns, while resident estates or trusts can claim up to $5,000 or 10% of their tax liability.
There are potential points of contention surrounding this bill, particularly regarding the effectiveness of the tax credit in promoting community engagement. Critics may question whether a tax credit sufficiently encourages individuals to contribute to endowment funds, or if it merely shifts existing donation patterns without generating additional charitable contributions. Furthermore, there could be discussions on the administrative burden of tracking and verifying donations as part of tax claims, as well as the long-term fiscal impacts of granting such credits on state revenue.