Use Oregon's IDA Credit to Lower Your Tax Liability

Sep 9, 2016 | By: Jeremiah Leppert

The Oregon Individual Development Account Tax Credit as a Tax Savings Vehicle

Donations to the Oregon Individual Development Account (IDA) Initiative can provide donors a deduction on their federal return, and a 70% credit on their Oregon return. Total credits available are limited, and it’s first come, first served.

The donation is included in itemized deductions as a charitable contribution. Oregon gives a credit for 70% of the donation if made by check. The credit is 67% if the donation is made by credit card or donation of stock.

Let’s look at the following example:

  • Taxpayer is a married couple
  • Taxable income of $200,000
  • Federal tax bracket of 28%
  • Donation of $1,000 by check

This couple would save $280 on their federal taxes (28% x $1,000) and $700 on their Oregon taxes. For a $1,000 donation, they cut $980 from their tax bill.

Assume that same couple had taxable income of $250,000, in the 33% federal tax bracket. They would save $330 on federal and $700 on Oregon taxes. That’s a total of $1,030 off from a $1,000 donation. This couple just made 3% on their donation!

This credit gives you as a taxpayer the choice between giving your tax dollars to the government or to a local charitable organization dedicating to enriching our communities.

This year’s contributions opened up on May 2nd but there is still time to contribute. As of August 2, 2016, there are still $4.03 million in tax credits available.

For more information on the Oregon IDA Initiative and how they use your donations, please visit this site.

If you would like more information on how this would apply to you or how to make a donation, please give us a call at 503.390.7880.

 

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