Press Room: Tax Release

August 28, 2013

Virginia Tax Credit for Certain Charitable Donations Is Now More Beneficial

Recent changes to the Neighborhood Assistance Program (NAP) have made this Virginia tax credit more attractive. Effective July 1, 2013, taxpayers will receive a tax credit of 65% of the value of a donor’s total contribution, up from 40%. 

The purpose of the NAP is to encourage businesses, trusts and individuals to make donations to approved tax-exempt organizations who provide education, job training, housing assistance, health care and community services for the benefit of low-income persons. The Virginia Department of Social Services has approved approximately 250 charitable organizations to participate in the NAP.

The maximum aggregate donation for which tax credits may be issued to an individual is $125,000 per tax year. The minimum donation is $500 and must consist of cash or marketable securities. 

Businesses, including pass-through entities and trusts are not limited in the maximum amount they can donate in a tax year. Their donations can also consist of cash, marketable securities, merchandise, real estate, leased facilities or certain services. 

Donations must be made directly to an approved NAP charitable organization and have no restrictions. Donors should contact the charitable organization to determine the amount of their remaining tax credits and complete a Contribution Notification Form. The Virginia Department of Social Services will issue the donor a tax credit certificate which should be attached to the donor’s tax return. Unused tax credits can be carried forward five years.

Virginia taxpayers planning to make charitable donations should weigh the benefits of the NAP tax credit as compared to the standard charitable contribution deduction.