How It Works

Donate

Donate to a Scholarship Granting Organization (SGO)

Tax Credit

Get a tax credit of 75% of your contribution.

Scholarships

SGO gives scholarships to students.

Students Thrive

Students can attend schools where they will learn and thrive.

How Your Taxes Are Affected

Illinois Taxpayers

Illinois taxpayers contribute to an organization that awards scholarships to eligible students. The taxpayer receives a tax credit equal to 75% of their contribution.

Withholding

If the taxpayer did not yet pay taxes, they can adjust their withholdings based on the value of their credit. 

Refund

If the taxpayer already paid state tax and then after contributes and claims a credit, the taxpayer receives a refund upon filing.

Carryforward

If the credit exceeds the taxpayer’s liability, the balance of the credit is carried forward up to five years.  

Scholarship Tax Credit Educational Seminar

How STC can work for you: Practical examples for people with various needs and priorities.

Examples

An Illinois resident with a taxable income of $80,000 has an approximate state liability of $4,000.

A. If the individual contributes $5,333.33, he will not pay any state income tax (or will receive an additional $4,000 refund if taxes were already withheld/paid). The full $5,333 donation goes to support a child’s education and the cost to the donor is only $1,333.

B. If the individual contributes $2,000, he will only pay $2,500 in state income tax (or will receive an additional $1,500 refund if taxes were already withheld/paid). The full $2,000 donation goes to support a child’s education and the cost to the donor is only $500.

Please note that these are general examples, and one should consult a tax professional to determine their tax benefits.

For more detailed illustrations click here.

PROCESS

Students Apply

Donors Give

Scholarships Awarded

Lives Transformed

Important

Marketable Securities

Marketable securities (e.g. stocks) donations are exempt from federal capital gains taxes making the potential tax benefit even greater.

Individual Donors

Individual donors may designate gifts to a specific school or a group of schools (e.g. Agudah schools, JUF schools). Corporate donors may not designate to specific schools but may direct their funds to one of five regions in Illinois (e.g. Cook County).

W-2 Employees

W-2 employees who plan on contributing can have their employers adjust their witholdings (a form IL-W4 is required.)

Self-employed Taxpayers

Self-employed taxpayers who plan on contributing can adjust quarterly filings.

Contributions

Under the current law, contributions cannot also be deducted as charity from federal taxes. (For those who take a standard deduction and don’t itemize, this is of no consequence.)