New Charitable Contribution Tax Credit for Vermonters
From the Vermont Department of Taxes - Vermont lawmakers enacted legislation in 2018 that provides for a nonrefundable credit against Vermont tax liability. The credit is 5% of the first $20,000 in eligible charitable contributions made during 2018. The maximum credit is $1,000, and it applies whether or not a taxpayer itemizes. Taxpayers should not send receipts or cancelled checks to the Department, but should keep them in the event that the Department requests proof of contributions.
Prior to the TCJA, signed into law in December 2017, approximately one-third of taxpayers had access to tax benefits associated with charitable giving. However, due to the doubling of the standard deduction at the federal level, which will result in fewer taxpayers having the ability to reach a threshold which makes itemizing beneficial, that number will drop significantly, resulting in less than 10 percent of Vermonters being able to enjoy a tax benefit for charitable contributions.
Act 11, enacted July 2, 2018, provides for a nonrefundable charitable contribution credit against the Vermont taxpayer’s tax liability. This credit is 5 percent of the first $20,000 in eligible charitable contributions made during the taxable year regardless of whether the taxpayer itemizes on their federal tax return.
In a press conference on Thursday, Governor Scott and Tax Commissioner Kaj Samsom urged Vermont taxpayers to take advantage of this change to Vermont’s tax code.
Taxpayers should keep any documentation of charitable contributions made in 2018, including receipts, as the law and credit are retroactive to January 1, 2018. The Department of Taxes may ask filers to produce donation records.
To view the full press release please click here.