The Illinois Tax Credit Scholarship Program is still very new and because of this we have had several people ask how donating to this scholarship, in the benefit of St. Francis High School, would be different than gifting directly to St. Francis High School. I thought it would be appropriate to answer these questions by giving examples to help you see the benefits of gifting to the Tax Credit Scholarship program.
For example, if someone in the 25% tax bracket gives a $1,000 gift to St. Francis High School, the donor would receive a 25% deduction or $250 off their taxes. If the same person donates $1,000 to St. Francis High School through the Tax Credit Program, they would receive 75 cents on the dollar tax credit, a credit of $750 on their State income taxes.
You can see that the additional $500 off your Illinois state income taxes is a great way to save money on your taxes and give an opportunity for low-income families to receive an education from St. Francis High School.
With an Illinois income tax increase from 3.75% to 4.95%, Illinoisans that make $100,000 would pay $4,950 instead of the $3,750 they paid last year. With this being said, donating to a cause you believe in, which would make up some of the $1,200 additional tax dollars, is a win-win.
Here is a further example regarding a corporate donation. According to the Tax Credit Scholarship Program, corporations cannot gift directly to a specific school like individual taxpayers, however, they can gift to specific regions; St. Francis High School is in Region 3. The funds would be distributed throughout that particular region for a scholarship.
For example, if a corporation is taxed at 21% and they gift $10,000 to St. Francis High School, a deduction of $2,100 would be made on their taxes. If they made a gift to Region 3 through the Tax Credit Scholarship, they would receive $7,500 credit towards their Illinois income taxes. This would be an additional $5,400 in tax savings.
Please know that this program greatly helps Catholic education. I urge you to ask your tax advisors about the Tax Credit Scholarship Program and how it could help you save more money.