By donating the $ 500, the taxpayer has both saved $ 500 in state tax liability and obtained a federal charitable contribution deduction of $ 500. (surlysubgroup.com)
But if the state issued a dollar - for - dollar state tax credit for charitable contributions made to, say, the state's general infrastructure fund, the first $ 6,000 donated, though reducing state tax liability by $ 6,000, does nothing to lower federal taxes owed because the taxpayer would still take the standard deduction. (surlysubgroup.com)
Corporations or individuals can offset state tax liability by donating to a private, nonprofit scholarship organization. (npr.org)