For decades, Michigan tax laws allowed residents to claim a partial credit for contributions to certain in-state charitable organizations. Taxpayers received a 50 percent credit, up to $200 for individuals and $400 for married filers with joint returns, for contributions in three categories: public institutions, including universities and public broadcasting stations, community foundations, and homeless shelters or food banks. Michigan Public Act 38 of 2011 repeals those credits, effective January 1, 2012.
Michigan Charitable Contribution Tax Credit
Cost to the State
Cost to the Charities
The loss of the tax credit concerns Michigan charities, who are encouraging donors to give a little extra this year to take full advantage of the credit. As a limited, non-refundable credit, the loss will not impact donors who don't typically owe taxes, and will have a minimal effect on large donors. Still, charities expect to see a decrease in total donations for 2012 as a result of the lost credit. As Robin Ferriby, the Community Foundation for Southeast Michigan's vice-president of philanthropic services, explains, people make contributions because they care, but tax policy effects how much they contribute. "People will give to charities they've supported in the past," anticipates Ferriby, "but they will give less because it costs them more."
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