The State of Kentucky is once again offering the Endow Kentucky Tax Credit, which allows those who take part in the program a unique opportunity to receive a state tax credit toward Kentucky income tax. The program is open to corporations and limited liabilities as well as individuals, and the Endow Kentucky program will begin accepting applications on July 1.

How the Endow Kentucky Tax Credit works

Contributions to the endowment fund can qualify for a tax credit to offset Kentucky individual income, corporate, or limited liability tax.  The ENDOW credit is a nonrefundable credit of 20 percent of the value of the endowment gift, not to exceed $10,000 for an individual or $20,000 for married filing joint.  It is permitted to carry any unused portion of the credit forward five years to offset future Kentucky state tax.

Act quickly to secure the benefit

The program, through Horizon Community Funds, has a cap of $1 million in credits offered to applicants for the current year.  There are many non-profit entities that have endowed funds in their name.  As in previous years, it is expected that the $1 million cap will be reached within a couple of weeks of opening for applications, so interested parties should act quickly.

How endowment funds are used

Endowment funds, which are established in perpetuity, are very useful for non-profit organizations to have reliable sources of incoming cash flows, ensuring the cost of operations can be covered.  For example, during and post the pandemic, contributions have generally been on the decline.  This causes uncertain cash flows making some operations difficult to continue to support.  Established Endow funds can help alleviate shortfalls and cash flow needs.  And there are a variety of funds for donors to consider for contribution, as well as the ability to open new charitable funds, with a minimum contribution of $25,000.

Applications for the program can be found on the State of Kentucky’s website.

Have a question about Endow Kentucky or other tax credits?

Get in touch for a free consultation with one of our top tax professionals – we’re here to help.