Illinois Tax Credit Scholarship Program Expands Quality Education Options for Low-Income and Working Class Families

In 2017, the Illinois Legislature approved the Invest in Kids Act

Illinois Tax Credit Scholarship Program Expands Quality Education Options for Low-Income and Working Class Families

In 2017, the Illinois Legislature approved the Invest in Kids Act. This historic law, the first of its kind in Illinois, transforms lives by providing up to $100,000,000 for scholarships to low-income and working-class children in Illinois to the private K-12 school of their choice.  Tax Credit Scholarships (TCS) offer these children the opportunity to receive the quality educations they deserve.

TCS are funded through private donations by individuals and corporations to scholarship granting organizations, which administer the application and scholarship granting process. The donors who fund these scholarships receive an Illinois income tax credit worth 75% of their gift.

The Diocese of Belleville, along with the other five Dioceses in the state have partnered with Empower Illinois as the scholarship granting organization that is used in Catholic schools across the state. Empower Illinois is an independent 501(c)(3) non-profit organization that is responsible for the following, among other things:

  • Receiving donations from individuals and corporations;
  • Receiving and processing scholarship applications from students/families; and
  • Distributing scholarships to eligible students/families in accordance with the law.

 Below is an example to assist in understanding the Tax Credit.

 UNDERSTANDING THE TAX CREDIT.

Donors who give to Empower Illinois receive a 75% tax credit for the amount of their gift, up to $1 million. In addition, any portion of the tax credit may be carried forward for up to five years. Therefore, the tax credit is incentive for a donor to increase the amount they donate in tuition assistance. Someone who owes $5,000 in state income tax and normally gives $1,000 in tuition assistance is out of pocket $6,000 per year. That same donor may now donate $4,000 through Empower Illinois (earning a 75% tax credit or the equivalent of $3,000 off their state income taxes) and will now owe the state only $2,000 in income taxes ($5,000 liability, minus $3,000 tax credit). The donor is still out of pocket $6,000 but they have quadrupled their impact. This example is illustrated below.

Example for a couple with a $5,000 income tax liability

Without a gift to Empower Illinois

With a gift to Empower Illinois

John and Jane donate $1,000 in tuition assistance to their favorite school but do not give through Empower Illinois.

John and Jane donate $4,000 in tuition assistance to their favorite school via a gift to Empower Illinois.

John and Jane owe $5,000 in Illinois income tax, since they receive no tax credit for their gift.

John and Jane owe $2,000 in Illinois income tax, since they receive a 75% income tax credit on their gift to Empower Illinois.

John and Jane are out of pocket $6,000 including $1,000 in tuition assistance and $5,000 in income tax.

John and Jane are out of pocket $6,000 but have quadrupled the amount they give in tuition assistance.

How does the process work?

Individuals wishing to donate may designate the school or school system (such as our Diocese) of their choice to be the recipient of the donation.

To donate, you must use My Tax Illinois to register. Once you have successfully registered, donors can indicate the amount they want to donate and reserve the corresponding tax credits through the Illinois Department of Revenue’s website. The Department of Revenue will grant tax credits on a first-come, first-served basis. Donating individuals and corporations then have 60 days from the date they receive the credit authorization certificate to donate that indicated amount to the SGO of their choice.

After donating, the individual or corporation receives a receipt from the SGO, indicating the donation was made, which then generates the corresponding tax credit. If a donor fails to make all or a portion of a donation payment to the SGO by the deadline, they shall not be entitled to a certificate of receipt for that portion of the donation not made.

Note that the donations are made directly to Empower Illinois and not the Illinois Department of Revenue.

You can refer to the website of the Diocese of Belleville at www.diobelle.org for more information and FAQs.

What is the impact of your donation?

There are currently 595 applications for scholarships across all the schools in our Diocese. Without the financial support of generous donors in the Diocese, most of these family applications will go unfilled. Please prayerfully consider assisting children and families in need receive a quality, Catholic education through this program.