Navigating Charitable Endowment Tax Benefits: A State-by-State Guide for Donors and Nonprofits

State	Donor Deduction Allowed?	State Tax Credit Available?	UPMIFA Adopted?
Alabama	Yes	No	Yes
Alaska	No state income tax	N/A	Yes
Arizona	Yes	Yes – Credits for donations to Qualifying Charitable Organizations (QCOs) and Qualifying Foster Care Charitable Organizations (QFCOs)	Yes
Arkansas	Yes	No	Yes
California	Yes	No	Yes
Colorado	Yes	Yes – Child Care Contribution Credit (50% of donation)	Yes
Connecticut	No	No	Yes
Delaware	Yes	No	Yes
Florida	No state income tax	N/A	Yes
Georgia	Yes	No	Yes
Hawaii	Yes	No	Yes
Idaho	Yes	No	Yes
Illinois	No	No	Yes
Indiana	No	No	Yes
Iowa	Yes	Yes – Endow Iowa Tax Credit (25% of donation)	Yes
Kansas	Yes	No	Yes
Kentucky	Yes	No	Yes
Louisiana	Yes	No	Yes
Maine	Yes	No	Yes
Maryland	Yes	No	Yes
Massachusetts	Yes	No	Yes
Michigan	No	No	Yes
Minnesota	Yes	No	Yes
Mississippi	Yes	Yes – Credits for donations to specific nonprofits	Yes
Missouri	Yes	Yes – Various credits for donations to specific causes	Yes
Montana	Yes	Yes – Qualified Endowment Credit (up to 40% of donation)	Yes
Nebraska	Yes	No	Yes
Nevada	No state income tax	N/A	Yes
New Hampshire	No	No	Yes
New Jersey	No	No	Yes
New Mexico	Yes	No	Yes
New York	Yes	No	Yes
North Carolina	Yes	No	Yes
North Dakota	No	Yes – Endowment Fund Contribution Credit (up to 40% of donation)	Yes
Ohio	No	No	Yes
Oklahoma	Yes	No	Yes
Oregon	Yes	Yes – Cultural Trust Tax Credit (up to $500 for individuals)	Yes
Pennsylvania	No	No	No
Rhode Island	No	No	Yes
South Carolina	Yes	No	Yes
South Dakota	No state income tax	N/A	Yes
Tennessee	No state income tax	N/A	Yes
Texas	No state income tax	N/A	Yes
Utah	Yes	Yes – 6% tax credit for charitable contributions	Yes
Vermont	Yes	Yes – 5% tax credit for charitable contributions	Yes
Virginia	Yes	No	Yes
Washington	No state income tax	N/A	Yes
West Virginia	No	No	Yes
Wisconsin	Yes	Yes – 5% tax credit for charitable contributions	Yes
Wyoming	No state income tax	N/A	Yes

1. Define Types of Endowments

Different types of endowments might have different implications, such as:

Unrestricted Endowments – Can be used at the nonprofit’s discretion
Restricted Endowments – Use dictated by donor intent
Term Endowments – Used after a specific period or event
Quasi-Endowments – Internally designated (board-restricted)

Each type typically has federal-level tax treatment under IRS rules (mostly donor deductibility and exempt investment income), but state laws might impact:

Tax exemptions on investment income
Treatment of donor deductions (state-level)
Reporting or registration requirements
UPMIFA (Uniform Prudent Management of Institutional Funds Act) adoption and tweaks

2. Tax Benefits to Donors

These can vary by state based on:

State income tax rates
Whether charitable deductions are allowed at the state level
Any tax credits for donations (some states offer these!)
Estate/inheritance tax benefits

3. Tax Benefits to Organizations

Investment income tax exemption (may vary for unrelated business income at the state level)
Property tax exemption (if endowment funds real estate)
Sales tax exemption on purchases (varies by state)
Charitable registration exemptions or thresholds

Notes:

Donor Deductions: In states with no income tax, charitable deductions at the state level are not applicable.
State Tax Credits: Some states offer tax credits instead of deductions, providing a direct reduction in tax liability.
UPMIFA Adoption: As of the latest data, all states except Pennsylvania have adopted UPMIFA, which provides guidelines for the management of endowment funds.

Nonprofits navigating the complexities of endowment management and tax compliance don’t have to do it alone. InstantNonprofit simplifies the process of forming and maintaining a 501(c)(3), offering tools and support to help organizations stay compliant and focused on their mission. From formation to IRS filings, and everything in between—including access to educational resources and strategic partners—InstantNonprofit empowers founders to spend less time on paperwork and more time driving impact. Whether you're building an endowment, seeking tax-exempt status, or planning for long-term sustainability, InstantNonprofit is your partner in purpose.

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