Community Investment Tax Credits

Thank you for your interest in supporting HIP!  Are you a resident of Maryland or a business that pays Maryland state taxes?  If so, HIP can help you boost your contribution by reducing your tax liability, using Maryland’s Community Investment Tax Credits. Most years, HIP receives an annual allocation of Community Investment Tax Credits from the Maryland Department of Housing and Community Development.  After the allocation, HIP finds individuals and businesses who wish to donate $500 – $500,000 in money, goods, or real property to HIP, and in the process, earn 50% of the value of the contribution in state tax credits.  Community Investment Tax Credits are usable in addition to the Federal and State tax deductions for charitable donations.

The combination of the tax credits and tax deductions significantly reduces the actual out of pocket spent per dollar donated…which allows for larger donations!  The following table shows how HIP and businesses at different tax rates can benefit from the Community Investment Tax Credits:

  Small Company Mid-Size Company Large Company
Tax Rate 17% (10% Fed, 7% State) 30% (23% Fed, 7% State) 43% (36% Fed, 7% State)
Donation to HIP $1,000 $1,000 $1,000
Combined tax deduction ($170) ($300) ($430)
Tax credit on state tax return
(50% of donation)
($500) ($500) ($500)
Total tax benefit ($670) ($800) ($930)
Net out-of-pocket cost $330 $200 $70

Eligible businesses include any entity that conducts a trade or business in Maryland and is subject to the state income tax, the public service company franchise tax, or the insurance premiums tax.  These types of entities generally include corporations, public utility companies, insurance companies, financial institutions, S corporations, partnerships, sole proprietorships, and limited liability corporations.

Eligible individuals include residents of Maryland.  Residents are defined as individuals who are living in Maryland on the last day of the taxable year, or individuals that live in Maryland for more than 6 months of the taxable year and are physically present in the state for 183 or more days during the taxable year.

For more information about making a donation and using Community Investment Tax Credits, please contact Maryann Dillon at 301-985-1252.