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What is the Educational Improvement Scholarships Tax Credit?

This credit is for people who made a donation to a scholarship foundation and had their credit approved by the Virginia Department of Education. If that applies to you, keep reading.

For taxable years beginning on or after January 1, 2014, but before January 1, 2028, an income tax credit may be claimed for monetary or marketable securities donations made to scholarship foundations included on an approved list published by the Virginia Department of Education. Credits may be earned in taxable years beginning on or after January 1, 2013, but before January 1, 2028. Tax credits earned during the taxable year must be claimed beginning with the taxable year during which they were earned.

The credit is equal to 65 percent of the monetary or marketable securities donation made to the scholarship foundation. The credit can be claimed against the individual income tax, corporate income tax, bank franchise tax, insurance premiums license tax, or tax on public service corporations. For individuals, the minimum value of any monetary or marketable securities donation eligible for a tax credit is $500 in a taxable year, and the maximum value of monetary or marketable securities donations eligible for tax credits is the first $125,000 in value of donations made in a taxable year. Such limitations on the minimum and maximum values of donations eligible for tax credits in a taxable year do not apply to donations made by any business entity, including a sole proprietorship.

Tax credits will be awarded to taxpayers on a first-come, first-served basis in accordance with procedures established by the Virginia Department of Education. The total amount of credits available in any fiscal year is capped at $25 million. Any unused tax credits may be carried over for the next five succeeding taxable years or until the total amount of credit has been taken, whichever is sooner. For additional information on how to qualify for certification, contact the Virginia Department of Education, 23rd Floor, P.O. Box 2120, Richmond, VA 23218-2120, Attn: Scholarships Tax Credits Program. Or email tax.credits@doe.virginia.gov.

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