Indiana Code 20-51 and Indiana Code 6-3.1-30.5 create a School Scholarship and School Scholarship Tax Credit Program. Funding for scholarships come from private, charitable donations to qualified scholarship granting organizations (SGOs). Donors (individuals or corporations) are eligible to take advantage of a 50% tax credit. While there are no limits on the size of qualifying contributions to an SGO, the entire tax credit program has a limit of $12.5 million for FY2018. This permits up $25 million in donations and scholarships for FY2018.
Individuals may also deduct the entire contribution on one’s federal tax return. Consequently, if you are the 25% Federal tax bracket, a $1000 contribution saves you $250 on your Federal return and $500 on your Indiana return, for an out-of-pocket expense of $250. This school scholarship program is very heavy on tax benefits, so I urge you to consider contributing to this scholarship program.
You might ask who benefits from this program. The Institute for Quality Education, Inc. is a Scholarship Granting Organization representing many private schools around the State of Indiana. There are well over 300 schools participating in the program, including grade schools and high schools. You can name the school or schools (but not a particular student) when you make a contribution, which can be made in appreciated stock, which provides additional tax benefits.
Each student must qualify for the scholarship based on a demonstrated financial need. The household income must be below 200% of the amount to qualify for Reduced lunch. For a household of 2, the amount of income ceiling is $60,088 for the current school year.
We can help you decide if this charitable donation works for you. We have the forms or we can help you find the answers to your questions.
There has been a lot of discussion in Indiana about the Voucher system. I’m pointing out the tax benefits, but I’m not here to offend your sense of justice. Instead, I’ll share a 2017 article from the Star, which uses a Q&A format to provide details for the program: