Annual Support Campaign

An individual is allowed an income tax credit for making a charitable contribution in the form of a planned gift to either a qualified nonprofit organization or to a qualified endowment fund.

The credit is equal to 40% of the contribution, up to a maximum credit of $10,000 (or $20,000 if married filing a joint return). An adjustment must be made to increase North Dakota taxable income by the amount that the contribution reduced the individual’s federal taxable income. If the credit exceeds the individual’s tax in the tax year in which the contribution is made, the excess credit may be carried over and used on subsequent tax years’ returns for up to 3 years.

Eligibility: A planned gift is a gift that qualifies as a charitable contribution for federal income tax purposes and is made using one of the following gifting methods:

• Charitable remainder unitrust (CRUT)
• Charitable remainder annuity trust (CRAT)
• Pooled income fund trust
• Charitable lead unitrust (CLUT)
• Charitable lead annuity trust (CLAT)
• Charitable gift annuity
• Deferred charitable gift annuity
• Charitable life estate agreement
• Donation of a paid-up life insurance policy

A qualified nonprofit organization is a tax-exempt charitable organization under federal income tax law that meets either of the following sets of criteria:

• It is incorporated or established in North Dakota and maintains a physical location in North Dakota.
• It is incorporated or established in a state bordering North Dakota; maintains a physical location outside North Dakota that is within 5 miles of a North Dakota city with a population of 5,000 or more that does not have a hospital; and supports or benefits a hospital, nursing home, medical center, or any combination of these.

A qualified endowment fund is a permanent, irrevocable fund that is:

• Held by a qualified nonprofit organization (or by a bank or trust company on behalf of the qualified nonprofit organization)
• Comprised of cash, securities, mutual funds, or other investment assets
• Established for a specific religious, educational, or other charitable purpose
• Only allowed to disburse the income from, or the increase in value of, the assets contributed to the fund

The permanent above-the-line charitable deduction ($1,000 individual / $2,000 joint) was passed as part of a new tax law (often referred to as the "One Big Beautiful Bill Act" or OBBBA) and is effective January 1, 2026. 

Key Details of the New Charitable Deduction

• For Non-Itemizers: Taxpayers who take the standard deduction will be able to claim a permanent above-the-line deduction for qualified cash contributions of up to $1,000 (single filers) or $2,000 (married couples filing jointly) per year, starting in the 2026 tax year. This deduction is not indexed for inflation.
• Qualified Contributions: Gifts must be made in cash directly to qualified public charities (such as churches, schools, and hospitals) and do not apply to contributions to donor-advised funds (DAFs) or private non-operating foundations.
• For Itemizers (New Limits):
  • Beginning in 2026, itemizers will face a new floor: only the portion of total charitable contributions that exceeds 0.5% of their Adjusted Gross Income (AGI) will be deductible.
  • For high-income individuals in the top tax bracket, the tax benefit of itemized deductions (including charitable donations) will be capped at a 35% tax rate.
• Planning Considerations: Because the current 2025 tax year offers a dollar-for-dollar deduction for itemizers without the new 0.5% AGI floor, many advisors are recommending that high-income donors accelerate their giving into 2025 or use "bunching" strategies with a DAF to maximize their deductions before the new rules take effect in 2026.