Tax Credits Scholarships
The Virginia Education Improvement Scholarships Tax Credits Program provides state tax credits for persons or businesses making monetary or marketable securities donations to approved scholarship foundations that provide scholarships to eligible students (at or below 300% of the poverty level) for qualified educational expenses incurred in attending eligible nonpublic schools.
The tax credit is equal to 65 percent of the monetary or marketable securities donation, and may be claimed against the individual income tax, corporate income tax, bank franchise tax, insurance premiums license tax, or tax on public service corporations. A monetary or marketable securities donation made by an individual must be at least $500 in order to qualify for the tax credit program. An individual may not be issued less than $325 or more than $81,250 in tax credits for a taxable year. However, the $81,250 tax credit limitation does not apply to credits issued to any business entity, including a sole proprietorship.
Individuals and businesses seeking to make a monetary or marketable securities donation to an approved scholarship foundation or an approved scholarship foundation on behalf of such person must request preauthorization for a specified tax credit amount from the Superintendent of Public Instruction. Tax credits are preauthorized to donors on a first come, first served basis.
A preauthorization notice issued to the donor by VDOE must accompany the monetary or marketable securities donation from the donor to the scholarship foundation.
The scholarship foundation must, within 20 days, return the notice to VDOE certifying the donor, the amount of the monetary or marketable securities donation, and the date it was received from the donor. Once the donation is approved, VDOE will issue a tax credit certificate to the individual or business donor which must be submitted with the applicable Virginia tax return in order to claim the credit.
To be eligible for participation in the Education Improvement Scholarships Tax Credits Program, scholarship foundations must apply to VDOE to be approved to receive and administer tax credit-approved funds.
Any donations that are made prior to the date the application is approved by VDOE will not qualify for the tax credit.