The law
permits a taxpayer to reduce Michigan Income Tax or single Business Tax
liability by a credit of 50% of the amount contributed to a community
foundation, subject to a maximum credit of:
a.
$100 for an individual filing
singly (based on a $200 contribution)
b.
$200 for a married couple filing jointly (for a $400 contribution)
c.
$5,000 or 10% of tax liability before claiming any credits, whichever is less,
for a resident estate or trust (for a $10,000 contribution)
d.
$5,000 or 5% of tax liability before claiming any credits, whichever is
less, for taxpayers filing Michigan Single Business Tax returns (for a $10,000
contribution)
Individuals
filing singly:
Actual cost of a $200 gift to Berrien Community Foundation or to Michigan
Gateway Community Foundation could be as little as $44, assuming a Federal
Income Tax rate of 28%. The federal tax deduction would be $56 and savings from
state taxes would be half the gift, $100. Total
tax savings would be $156, leaving an actual cost of the gift of only $44.
Individuals
filing jointly: Actual cost of a $400
gift to Michigan Gateway Community Foundation or to Berrien Community Foundation
could be as little as $56, assuming a Federal Income Tax rate of 36%. The federal tax deduction would be $144 and savings from
state taxes would be half the gift, $200. Total
tax savings would be $344, leaving an actual cost of the gift of only $56.
Corporations:
Actual cost of a $10,000 gift to either community foundation could be as little
as $3,300. Assume a projected State Single Business Tax liability of $100,000
and a Federal Marginal Income Tax rate of 34%.
The savings from federal taxes would amount to $1,700; the savings from
state taxes would be half the gift, $5,000.
Total tax savings would be $6,700, leaving an actual cost to the
corporation of only $3,300.