By: Lisa M. Wood, CPA, MT - Director of Tax
An Ohio tax credit is available for individuals and pass-through entities that make monetary donations to an eligible Scholarship Granting Organization (SGO). This credit was new in 2021. At that time, very few organizations were certified as SGOs, however, the list of qualified organizations expanded greatly in 2022 and again in 2023.
Taxpayers can claim a non-refundable credit for monetary donations to an eligible SGO.
- The credit amount is the lesser of:
- $750 per taxpayer or
- the total amount donated to SGOs during the year
- A married couple filing jointly can claim up to a $1,500 credit.
- To provide the proper accounting trail, each spouse must write and sign separate checks for their contributions.
Beginning in 2023, the tax credit is available for donations made on or before the un-extended due date of the tax return (April 15, 2024). However, the same contribution cannot be used to claim the credit in both years.
Eligible institutions must be certified through the Ohio Attorney General’s Office. A list of SGOs can be found online here: https://charitable.ohioago.gov/Scholarship-Granting-Organization-Certification/List
Requirements to be classified as an SGO include:
- Be a nonprofit organization exempt from federal taxation under Internal Revenue Code §501(c)(3)
- Primarily award scholarships for students to attend grades K-12
- Prioritize awarding scholarships to low-income students.
This credit is a great option for taxpayers who wish to contribute to funding primary and secondary education. For every dollar contributed up to the $750 limit, Ohio will refund the amount of the donation. Taxpayers who itemize deductions on their federal return can actually take an additional charitable contribution deduction, so they are getting more of a tax benefit than the amount of money they are donating.
If you have questions regarding this tax credit or eligible donations, please contact your Buckingham advisor.