How It Works

The Community Investment Tax Credit (CITC) provides a 50% tax credit against Commonwealth of Massachusetts tax liability. The CITC program is a refundable tax credit.

  • CITC Evaluation - Executive Summary (PDF)
  • CITC Evaluation - Report (PDF)
  • Go to the Commonwealth of Massachusetts CITC webpage
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    Donors will invest in a CDC's Community Investment Plan i.e. a CDC business plan, providing flexible working capital that can be used to seed new programs, fill funding gaps and leverage other resources. If the donor does not have sufficient tax liability, the credit is refundable, whereby the Commonwealth will issue a check for the balance of the credit to the donor. The maximum donation each year of the program is $2 million per tax paying entity. The minimum donation each year is $1,000.

    Benefits:

    • Considerable Tax Savings
    • Individuals and Corporations can take advantage of tax credit
    • Excess tax credit is refundable
    TAX SAVINGS EXAMPLES
    Situations vary. Consult a professional tax advisor.
     

    Individual,
    Itemized

    35% tax bracket

    Individual,
    AMT1

    28% tax bracket

    Corporation,
    Business

    35% tax bracket

    Nonprofit

     

    Donation$  10,000$  10,000$  10,000$  10,000
    CITC$  (5,000)$  (5,000)$  (5,000)$  (5,000)
    Federal Charitable Tax Deduction - 2$  (3,500)$  (2,800)$  (3,500)N/A
    1st Year Tax Savings$     8,500$     7,800$    8,500N/A
    1st Year Out-of-Pocket Cost$    1,500$    2,200$    1,500$    5,000
         
    Possible 2nd Year "Add Back" - 3$    1,750N/A$    1,750N/A
         
    Possible Final Out-of-Pocket Cost - 4$  3,250$  2,200$  3,250$    5,000

    1- Alternative Minimum Tax

    2 - Donations through the CITC program qualify for the Federal Charitable Tax Deduction on the TOTAL donation.

    3 - A donor's federal income tax may be impacted in the subsequent year depending on their individual tax situation. Because state tax payments can be tax deductible, a reduction in state taxes may reduce your federal deduction, thereby increasing your federal taxable income by the amount of your CITC credit/refund. At most, the year 2 federal tax impact will be half the year 1 federal tax savings. In contrast, taxpayers subject to the Alternative Minimum Tax will not be impacted in this manner. Please consult a tax advisor regarding specific situations.
    4 - Please consult a professional tax advisor to determine the final out-of-pocket cost for specific donors.

    For more information on the Community Investment Tax Credit, please contact Joe Kriesberg at (617) 379-5922 or joek@macdc.org.