Businesses can claim capped tax credits for gifts to small hospitals

Businesses may claim tax credits for cash contributions to eligible hospitals. The credits apply to voluntary cash contributions to eligible hospitals. They may be used against specified state income and insurance premium taxes, and taxes on real property. Only businesses operating as corporations, limited liability companies, partnerships, or sole proprietorships may claim the credits. The credit used in a year cannot exceed 50% of the business’s covered state tax liability or 50% of its real property tax liability. Credits are capped at $100,000 per hospital and $1 million total each calendar year. A contribution claimed for a credit cannot also be deducted for state income tax. The law took effect January 1, 2026. The Department of Revenue may allocate credits through December 31, 2029. Unused credits may carry forward for five years after the tax year they were earned.

Hospitals must meet size, emergency-care, planning, and accounting requirements to qualify. Eligible hospitals are general acute-care or rural emergency hospitals with 49 or fewer licensed inpatient beds and an emergency department that provides emergency services 24 hours a day, every day. A hospital must engage a healthcare consulting firm to help develop and update a strategic plan, or use nationally accepted best practices for small or rural hospitals instead. It must also have a qualified healthcare accounting firm provide reimbursement and cost-reporting help before it qualifies. The hospital must certify its eligibility under penalty of perjury and report changes that could affect eligibility. A qualified accounting firm must be engaged before the hospital qualifies. The Department of Revenue reviews the hospital’s certification and may later request another.