There are numerous programs available in various states where state tax credits are used as an incentive to encourage taxpayers to contribute money or property to a governmental or charitable entity.  For example, under one program, a taxpayer contributes $100 to a charity and is entitled to a state income tax credit of $50.    One issue that is often raised is whether the taxpayer is also entitled to a federal and state charitable income tax deduction.  In IRS Chief Counsel Advice 201105010, it was noted that the tax benefit of a charitable deduction is not regarded as a return benefit that negates a charitable deduction.  The IRS concluded that state tax credits should be treated the same.  Therefore, the taxpayer is entitled to a charitable deduction in the amount of the contribution, and is not reduced by the amount of the state tax credit.  This is helpful guidance.