Education Improvement Scholarships Tax Credits

Virginia EISTC Program

Overview:

  • According to Virginia’s new Education Improvement Scholarships Tax Credits (EISTC) program, donations to approved foundations will provide scholarships for low-income new students at Virginia   non-public schools.

  • Individual or Business Donors then receive Virginia TAX CREDITS equal to 65% of the donation.

 

Benefits to Donors:

  • Individuals can use the Tax Credits against their Virginia personal income tax liability. Businesses can claim the Education Improvement Scholarships Tax Credits against:

    • Virginia Corporate Income Taxes

    • Virginia Bank Franchise Tax

    • Virginia Insurance Premiums License Tax

    • Virginia Public Service Corporations Tax

    • Personal Income Taxes via pass-through entities such as S-Corporations, LLCs and Partnerships

  • Additional Tax Savings: In addition to a 65% Tax Credit for the year following the year of the gift, individuals and businesses may also receive federal and state deductions for a charitable contribution, and therefore achieve tax savings in two ways:

    • For the year the gift is made, donors may be able to take a deduction of the full amount of the contribution against taxable income as a charitable donation on both federal and state income taxes.

      •The tax reduction equals the contribution amount times the tax rate of the applicable tax (federal or state).
      •Subject to rules governing deductibility of charitable contributions

  • IMPORTANT:  Donors should consult their tax advisors to determine their specific tax savings.

 

Eligible Donations:

  • The minimum donation to receive Tax Credits through this program is $500.

  • The maximum donation limit for individuals is $125,000.

  • There is no maximum amount for any business entity, including sole proprietorships.

  • Donations may be monetary or marketable securities.

  • The amount of the Tax Credits may not exceed the Virginia tax liability for the year in which the credits are claimed, however…

    • Tax Credits may be carried over for the next five succeeding years.

 

Process for Obtaining Tax Credit:  

  • Before making the donation, obtain a blank Letter of Intent and Preauthorization Form from BSH or McMahon Parater Foundation for Education (MPFE).

  • Return the Letter and Form to MPFE, which will submit the Preauthorization Form by secure electronic dropbox to the VA Department of Education (DOE) for approval.

  • The DOE will respond to the donor directly with a Preauthorization Notice once the Tax Credits have been approved.

  • The donor has 180 days after receiving the Notice from the DOE to send the donation to MPFE, with the Notice of approval.

 

More Information & Donor Forms

*The 2 forms to the right MUST be completed in order to make a donation!

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