About this time last year, we first learned about a little known school choice program in our Commonwealth called the Virginia Education Improvement Scholarships Tax Credits Program. After conducting our own due diligence, including consulting with our CPA, Cassie and I decided to contribute $5,000 through the business to provide Christian worldview education scholarships through the Renewanation Virginia Scholarship Foundation. What we discovered is that this is an excellent tax planning tool (more on that below) that we now encourage all of our clients to consider taking advantage of. More importantly, it is a great way to leverage your giving dollars as a high impact Kingdom investment in the future of our nation’s children.
Here is how it works:
Simply put, for every $1 dollar contributed to the program ($500 minimum up to a maximum of $125,000), Virginia residents receive a tax credit of 65 cents against their state income tax obligation for that tax year. Unused tax credits may be carried over for a maximum of 5 years. In addition, the full amount of the contribution is fully deductible on the federal income tax return. The net result is that most donors’ contribution costs them very little or nothing due to the offsetting tax benefits (typically 75-105% of tax liability). In our case, because we had already fully paid our state income tax obligation for the year, we ended up getting a refund from the state.
Where does the money go?
By law, at least 90% of the contributions received by eligible scholarship foundations through the program must be distributed in the form of scholarships for qualifying education expenses to need-eligible students at qualified private schools. Because we made our contribution through the RenewANation Virginia Scholarship Foundation, we were able to ensure that our donation was directed specifically for Christian worldview education.
What if you don’t live in Virginia?
Similar Education Scholarship Tax Credit Programs are available in many other states. Those include: AL, AZ, FL, GA, IA, IN, KS, LA, MT, NH, NV, OK, PA, RI, SC, and SD. Full details for each are available at https://www.edchoice.org/ . If you would like to learn more about how you can trade tax dollars for scholarship dollars to create educational blessings in the world, please give us a call to discuss your particular situation.
Yours for wise stewardship!
Rick & Cassie Laymon
For the Beacon Wealth Team