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Contributors Tax Credit Information
Important News - The expiration date of the Invest in Kids Scholarship Tax Credit Program was December 31, 2023. Contributions made to a Scholarship Granting Organization (SGO) after December 31, 2023, will not be eligible for a tax credit. See Informational Bulletin FY 2024-17 for more information.
An Invest in Kids tax credit must be claimed in the tax year that the contribution was made. Any Invest in Kids tax credit not fully used in the year it was first claimed may be carried forward for the next five tax years, even if the five-year carry forward period is past the expiration date. For example: If a calendar year filing taxpayer makes an eligible contribution to an SGO in 2023, the tax credit must be claimed on the 2023 tax return. Any excess credit not used on the 2023 tax return may be carried forward until 2028.
Income Tax Credits
Invest in Kids offers approved Illinois individual and business taxpayers income tax credits in the amount of 75 percent of their total qualified contributions made to one or more Scholarship Granting Organizations (SGOs) during a taxable year. Credits cannot exceed $1 million per taxpayer, per year.
Example: A taxpayer makes a qualified contribution of $10,000 to an approved SGO. The taxpayer will be eligible to claim a $7,500 tax credit.
The Department can issue up to $75 million in tax credits per calendar year which are distributed geographically throughout the five regions. Income tax credits are awarded on a first-come, first-served basis, and approval is granted as long as the regional and statewide thresholds have not been met.
You must request approval to make a contribution and receive the Contribution Authorization Certificate (CAC) prior to making your contribution. Applications for the 2023 tax year will be available starting at 12:01 a.m., Sunday, January 1, 2023 and must be requested online through MyTax Illinois.
Important: You must have a registered MyTax Illinois account for filing either individual income tax or business income tax in order to apply for approval to make a contribution. If you want to apply, you are encouraged to create a MyTax Illinois account as soon as possible to avoid any processing delays when the application system goes live.
Contribution Authorization Certificates
Once your application has been submitted, and the Department confirms that credits are available, the Department will issue you a Contribution Authorization Certificate (CAC). The CAC will be issued electronically to your MyTax Illinois account within three business days of approval of your application.
Example: A taxpayer files an online application indicating he intends to contribute $1,000 to Children Benefit from Education Scholarship Organization for the benefit of Region 4. As long as the regional or the total statewide maximums have not been reached, the taxpayer will receive a CAC from the Department authorizing his $1,000 contribution to the SGO, which equates to a $750 tax credit.
You must make your contribution to the SGO within 60 days after issuance of the CAC. You must provide a copy of the CAC to the SGO. Within 30 days of receiving your contribution, the SGO will issue you a Certificate of Receipt (COR) through your MyTax Illinois account.
Note: An individual taxpayer making a contribution to an SGO may specify which school within the taxpayer’s approved region he or she wishes his or her contribution to benefit. Your CAC number, the amount of your approved contribution, and your last name or business name will be made available to the SGO you select in its MyTax Illinois account.
Claiming Your Income Tax Credit
To receive a tax credit for your contribution, the payment for the contribution must be received by the SGO by the last day of your filing period and the approved SGO must confirm receipt of the contribution. Approved credits may be claimed beginning with the filing of your 2022 income tax return. You cannot take a tax credit under this Act if you claimed any portion of this contribution as a federal income tax deduction.
Individuals who are married and filing a joint return are considered one taxpayer for purposes of making qualified contributions.
Example: If two married individuals each contribute $1,333,333 intending at the time of the contribution to file separate returns, but subsequently file a joint return, the maximum credit allowed is $1,000,000.
If you don’t use all of your income tax credit, you cannot receive a refund. However, any credit amount that exceeds your tax liability for the year may be carried forward and applied to your tax liability in the subsequent five taxable years. Credits carried forward do not require additional approval. Credits are applied to the earliest year for which there is a tax liability. Credits cannot be carried back to a prior tax year.
Please note: To make a new Invest in Kids contribution, you must apply each year.