Tax Credit Scholarship Opportunity for Donors
The Invest in Kids Act, signed by Governor Rauner on August 31, 2017, establishes a comprehensive Illinois scholarship program for low-income, qualifying students attending non-public schools in Illinois. It provides up to $75 million in tax credits annually for Illinois taxpayers who contribute to fund the scholarships.
How it Works
Individual and corporate donors go to a Department of Revenue website and apply to make a “contribution” and reserve Illinois tax credits equaling 75% of their contribution. Tax credits will be reserved on a first-come, first-serve basis up to $75 million, with a maximum tax credit of $1 million per donor (and a maximum contribution of $1,333,333 per donor.)
If a donor’s application to make a contribution and reserve tax credits is approved, the donor will be issued a certificate of authorization from the Department of Revenue, and will have 60 days to pay the full amount of his approved contribution. The donor must pay the contribution to a State-Approved Scholarship Granting Organization (SGO); however, an individual, non-corporate donor may designate a school such as IC Catholic Prep as the ultimate recipient of the contribution. In that case, the SGO will then pay IC Catholic Prep the full amount of the designated contribution, which must be used by the school for scholarship purposes. In the meantime, the donor will be entitled to an Illinois tax credit equal to 75% of his/her contribution.
Please note: the donor cannot take a federal tax deduction as well.
If a donor makes a $10,000 approved contribution to an SGO and designates IC Catholic Prep as the recipient, the donor will receive a state tax credit—not merely a tax deduction—of $7,500. After applying the Illinois tax credit, the net cost to the donor will be $2,500, while IC Catholic Prep receives the full $10,000 contribution as a scholarship to support a qualifying student.
If the same donor increases his/her approved contribution to the SGO to $20,000 while still designating IC Catholic Prep as the recipient, the donor will receive a state tax credit of $15,000. In that case, the net cost to the donor, after the Illinois tax credit, will be $5,000, and IC Catholic Prep will receive the full $20,000 contribution amount as a scholarship for a qualifying student.
- Speak to your tax professional about whether this program is right for you.
- If you wish to reserve tax credits, you are required to have a State of Illinois “MyTax” account. If you don’t have a “MyTax” account, you can open one at mytax.illinois.gov. As part of the process, you will need to apply for a “Letter ID” (allow 7-10 days to receive by mail).
- Keep an eye out for email updates from IC Catholic Prep as more specific regulations regarding the tax credit scholarship legislation are being finalized by the Illinois Department of Revenue.
If you any questions, contact Mrs. Jen Ryan
. Phone: 630.530.3485.
Donors to IC Catholic Prep are encouraged to contribute to either Empower Illinois
as a family, it is to your advantage to apply to as many SGOs as possible; however, you should prioritize applying to Empower Illinois and Big Shoulders Fund over the other remaining SGOs.