By Charles R. Kennedy, CPA, MBA Director of Tax Services G.T. Reilly & Company
A new tax incentive to encourage support of economic development in low- and moderate-income neighborhoods is available to corporations and individuals in Massachusetts this year.
The Community Investment Tax Credit (CITC) provides a 50% state tax credit for donations of $1,000 to $2 million to qualified community development corporations. Some 51 CDCs in the commonwealth are certified to receive these donations.
Available to individuals and businesses
The tax credit may be taken either by corporations or individuals. A total pool of $6 million in CITC credits is available annually through 2019. Donors who wish to take advantage of this tax incentive should check with their tax advisors first to ensure that there is still availability in the pool.
Community development corporations support economic development in their towns and neighborhoods through housing and business initiatives. CDC programs include real estate development, small business development, creation of parks and infrastructure and first-time homebuyer programs. According to the Massachusetts Association of Community Development Corporations, its members have invested more than $587 million in Massachusetts towns and cities in 2016, through programs to provide housing, stimulate business ownership and create jobs.
United Way administering
The United Way is administering the CITC program for the commonwealth. Donors may earmark donations to benefit specific certified CDCs, or they may make general donations that United Way will direct.
The CITC is noteworthy since Massachusetts has no standard deduction or tax credit for charitable giving by individuals. Corporations in the commonwealth are able to take deductions for charitable giving to the same extent that they can do so on their federal tax returns.
If you have questions about how to donate to a CDC and take advantage of the CITC, please email Charlie Kennedy or call him at 617-696-8900.