Montana Endowment Tax Credit

What is the Montana Endowment Tax Credit?

The MT Endowment Tax Credit allows donors to pay less in Montana state income taxes when they give a qualifying planned gift to a Montana charitable endowment.

The incentive is 40% of the gift’s federal charitable deduction, up to a maximum $10,000 tax credit, per year, per individual, and a credit of 20% of a direct gift by a qualified business, up to a maximum of $10,000 per year.

  • It has to be a planned gift (Deferred Gift Annuity, Charitable Remainder Trust, Charitable Lead Trust)
  • It has to be a permanent endowment in the state of Montana.

We always recommend talking to your CPA or Estate planner regarding your planned gifts.

What is an Endowment?

An endowment is a fund held by a tax-exempt organization where the principal of the fund is not wholly expendable. Only the interest and appreciation earned in an endowment fund can be used for current operations. Endowments are established to help Montanans meet long-term needs in our communities for education, social services, health care, economic development, the arts and more.

What is a Charitable Gift Annuity?

A charitable gift annuity or deferred charitable gift annuity is a contract between a donor and the Missoula Community Foundation, under which Missoula Community Foundation, in return for a transfer of cash, marketable securities, or other assets, agrees to pay a fixed amount of money at set date chosen by the donor each year to one or two individuals, for their lifetime. Remaining funds are given to the charity/endowment at the time of death or when the annuitant releases the funds.This is a great way to take advantage of the Montana Endowment Tax Credit and help build legacy dollars for our community needs for future generations.

Individual Planned Gift

Individuals who make a planned gift to a qualified Montana endowment fund will receive a tax credit of 40% of their gift, with a maximum credit of $10,000 ($20,000 for joint filers).

Business Outright Gift

Businesses and corporations that make a direct gift to a qualified Montana endowment fund will receive a tax credit of 20% of their gift, with a maximum credit of $10,000.

Montana Endowment Tax Credit Example

  1. You contact the Missoula Community Foundation and tell them how much you would like to donate – for this example we will use $20,000. We will show you the list of qualified Montana endowment funds or talk to you about starting your own.
  2. You choose which funds you would like to benefit from your gift. You may select either one or several funds or, you may set-up your own named permanent endowment fund.  We will collect the information from you that we need to draw up your paperwork and set up a deferred charitable gift annuity, an easy planned gift that will allow you to take advantage of the tax credit. 
  3. With a gift of $20,000, $18,057 would qualify as charitable. You and your partner filing jointly would receive  $10,835 (Charitable amount – State Tax Credit) federal charitable deduction and a Montana State tax credit of 40% of this gift (based on a joint gift) totaling approximately $7,222. This amount would be a direct credit to the taxes you owe to the State of Montana. (The amounts are hypothetical and will vary depending on life expectancy, age at the time of the gift and your income tax level).
  4. The Missoula Community Foundation will hold this gift in an annuity fund where it is invested and grows with earnings. Once you release the contract for the annuity or the annuity commitments are paid out, it will roll into the qualified endowment fund(s) you have designated with interest and be put to work benefiting our community.
  5.  The gift must be held in a separate annuity fund for a minimum of five years before it can be reassigned to your selected charity or named fund.

**This is just one example of how you can take advantage of the Montana Endowment Tax Credit.

Set Up Your Meeting with Marcy