The state of Indiana sets aside funding for tax credits for individuals and businesses that wish to support scholarships for eligible students attending qualified private schools. Donors receive a state tax credit equal to fifty-percent (50%) of the amount donated. There is no limit on the amount of tax credits an individual or business can receive. Please consult with a tax professional regarding your unique circumstances because federal deductions vary.
Our calculator is one way to understand how tax credits and deductions impact the TRUE COST of your donation.
Below you will find some information and some general examples of the federal benefit from SGO gifts. Every situation is unique, and we encourage you to talk to your tax adviser for a full understanding of your tax benefits.
- All taxpayers will continue to receive a 50% state tax credit as long as credits are available for their gifts made to Indiana SGOs.
- SGO donors who do not itemize on their federal tax return do not receive additional benefits for their SGO gift on their federal return.
- All SGO donors who itemize on their federal return may claim 50% of their SGO gift as a charitable donation.
- In addition, donors who itemize and have less than $10,000 in state and local tax deductions (Schedule A, line 5e) may include 50% of the gift as a state income tax payment(Schedule A, line 5a). (Per pending "safe harbor" regulations, IRS notice 2019-12.)
- SGO donors who itemize and have more than $10,000 in state and local tax (SALT) deductions experience the same net deduction by only claiming half of the amount of the donation on the charitable line because paying less in state taxes doesn't impact the SALT line on their Schedule A.
- The NET EFFECT for SGO donors who itemize (whether they have less than or greater than $10,000 in state and local taxes to deduct) will be the SAME. The NET EFFECT will also be the same as it was prior to the 2018 tax law changes.
The chart to the right shows some examples of the net federal tax deductions for SGO donations. The "offset" amount is due to less state tax being paid (either in the year when the credit is claimed or in the following year).
These are only illustrations; please consult a tax adviser for specific applications.