In July 2015, the Oregon Legislature renewed the Tax Credit funding of the Oregon IDA Initiative. Individual Development Accounts (IDAs) allow low income individuals to earn 3 to 1 matching funds on up to $1000 of individual savings per year (the saver gets a $3,000 match) from a pool of tax advantaged contributions. Options for IDA participants include saving to fund down payments on homes, to plan for college or even to fund start-up costs for a new business.
Tax credit program contributions will reopen on or about October 5, 2015, with approximately Two Million in contributions available for 2015. Changes to the tax credit include, no maximum for yearly individual donations and a 70% allowable tax credit for Oregon. The credit is limited annually to the purchasers Oregon tax and unused credits carry for three more years.
Someone donating to this program also will receive a federal charitable deduction for the gross amount spent. Donations are made through the Oregon IDA Initiative website. Members of the Oregon Housing and Community Services committee are currently working on rules governing future contributions.
A simple example: Our taxpayer who is in the 30% federal tax bracket invests $10,000 in the program. They will receive an Oregon credit allocation of $7,000 to apply against their taxes over the next four years and a charitable deduction of $10,000 on their federal return, reducing federal taxes about $3,000. The net cost to the donor is zero. If our taxpayer had a federal bracket higher than 30%, then the tax savings would exceed the cost.
For more information, visit: oregonIDAinitiative.org or Neighborhood Partnerships at: neighborhoodpartnerships.org