10 Jul School Scholarship Tax Credit Program for Indiana Taxpayers
By Trent Wolfe
Have you ever thought about creating a scholarship for low to middle income students to attend non-public schools? Now might be the best time to start a scholarship for a local private school. Indiana has a tax credit available to individuals and corporations for contributions to a scholarship granting organization (SGO). The Indiana tax credit is 50% of your contribution. The only limitation is Indiana will issue $12.5 million dollars in credits from July 1, 2017, through June 30, 2018. You can check the total credits claimed during the period by clicking here. Any unused SGO credit claimed by the taxpayer in the current year can be carried forward for 9 years, but is never refundable. You will also want to plan your other nonrefundable credits accordingly, i.e. Indiana college contribution credit, Indiana 529 Plan credit. If you have Indiana tax withheld from your sources of income, the withholding would be refunded on your Indiana tax return if you decide to make a contribution to an SGO.
Another great advantage of the SGO tax credit is you are allowed to take it in multiple years. A taxpayer can make a contribution in 2017 and as long as there are credits remaining for the SGO tax credit, another contribution could be made in early 2018. You will want to make a decision on your first contribution soon as the contribution needs to be received by the SGO before December 31, 2017, to be eligible as a tax credit on your 2017 Indiana tax return.
Another great incentive in this program is the contribution to the scholarship granting organization (SGO) is considered a charitable donation. If you take itemized deductions on your federal tax return, you will receive a federal benefit for your contribution to the SGO as well as the Indiana tax credit. If your individual tax bracket is 25%, and you take the itemized deductions, your contribution will decrease your federal tax by 25%, plus an additional 50% reduction for Indiana tax. The combined federal and Indiana tax savings for a contribution to an SGO is 75%, when you are in a 25% tax bracket. Corporations have more limitations on the amount allowed as a charitable contribution depending on the income in the corporation and the total amount of other charitable contributions for the year.
If you would like to set-up a scholarship for a non-public school, you will want to contact a scholarship granting organization. Listed below are the approved SGO’s for Indiana. If you have questions about the functions of the program, you will want to contact a member from the organization of your choice. If you have a question on the tax credit, please contact our office and we can assist you with your questions.
School Scholarship Tax Credit Program
Approved Scholarship Granting Organizations as of 2/24/17
Elkhart County Community Foundation
P O Box 2932
Elkhart, IN 46515
Amanda Jamison, Program Officer
Date of Apprval: February 2, 2015
Institute for Quality Education, Inc. (formerly Educational Choice Charitable Trust)
101 West Ohio St., Suite 700
Indianapolis, IN 46204
Betsy Wiley, President & CEO
Date of Approval: January 13, 2010
School Scholarship Granting Organization of Northeast Indiana, Inc.
915 South Clinton Street
Fort Wayne, IN 46802
Marsha Jordan, Superintendent
(260)442-4611 Ext. 3316
Date of Approval: March 5, 2010
Sagamore Institute Scholarships for Education Choice
2902 North Meridian Street
Indianapolis, IN 46208
Laurel Christensen, Senior Fellow and Director
Date of Approval: March 4, 2011
The Lutheran Scholarship Granting Organization of Indiana, Inc.
1145 Barr Street
Fort Wayne, IN 46802
Jon Dize, SGO Administrator
Date of Approval: October 30, 2012
LaGrange County Community Foundation, Inc.
109 E. Central, Suite #3
LaGrange, IN 46761
Octavia Yoder, Program Officer
Date of Approval: August 26, 2016