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Education Improvement Scholarships Tax Credits Program

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Introduction

The Education Improvement Scholarships Tax Credits Program has expanded education opportunities for thousands of Virginia students and families since its inception in 2012 — without impacting state support for public schools.

The program provides state tax credits for donations made to Approved Scholarship Foundations (Word) that provide scholarships to eligible students and attending participating private schools and non-public pre-kindergarten programs.

Approved scholarship foundations make payments directly to eligible schools selected by qualifying parents or legal guardians.

Information for Parents

Scholarships are available for students whose family income does not exceed 300% of federal poverty guidelines. Family income for students with disabilities with an individualized education program may not exceed 400% of federal poverty guidelines.

The first step in applying for a scholarship is to contact a participating non-public school or pre-kindergarten program. Use the interactive map below to access contact information for participating schools and programs.

EISTC Map Project

Scholarships are generally limited to the state share of per-pupil Standards of Quality funding — or the state share of per-pupil Virginia Preschool Initiative funding — for the locality in which the recipient resides, but attendees of some special education schools can receive larger scholarships. Representatives of participating schools and programs can provide detailed information about available scholarships.

Information for Schools

Participation requirements include accreditation through the Virginia Council for Private Education (VCPE), or maintenance of an assessment system that measures scholarship recipients’ annual progress in reading and mathematics using a norm-referenced achievement test recognized by the Virginia Department of Education. Schools should consult the Guidelines for the Education Improvement Scholarships Tax Credits Program (Word) for details on eligibility and reporting requirements.

Information for Scholarship Foundations and Donors

To participate in the program, scholarship foundations must apply to the Virginia Department of Education for approval to receive and administer tax credit-approved funds. Donations made prior to application approval by VDOE do not qualify for the tax credit.

Tax credits under the program are equal to 65 percent of the value of the monetary or marketable securities donation, and may be claimed against the following state taxes:

  • Individual income tax
  • Corporate state income tax
  • Bank franchise tax
  • Insurance premiums license tax
  • Tax on public service corporations

Tax credits may be claimed for the taxable year in which the donation was made. Unused tax credits may be carried over for the next five succeeding taxable years or until the total amount of the credit has been taken, whichever is sooner.

The total amount of tax credits that may be issued during each program year (i.e., state fiscal year) is $25 million. For more information about donations and tax credits under the program, go to the following:

Qualified Donations & the Tax Credit Approval Process - Information for the Donor

Frequently asked questions about donations and tax credits:

What is a qualified donation?

A qualified donation is any monetary (check, credit card, payroll deduction, electronic funds transfer) or marketable securities (stocks and mutual funds) donation made to an approved scholarship foundation. A donor is prohibited from identifying a specific scholarship recipient.

For individuals:

  • $500 is the minimum donation eligible for tax credits in a taxable year.
  • $125,000 is the maximum amount of donations eligible for tax credits in a taxable year.

For businesses:

  • There is no minimum or maximum donation limitation for businesses. 

Donations made prior to the date of the Department of Education’s Preauthorization Notice, more than 180 days after the date of the Preauthorization Notice, or in excess of the amount preauthorized, will not be approved for tax credits. 

How does the Donor obtain the Preauthorization Notice?

  • Option 1: The donor contacts an approved scholarship foundation (see list on the main EISTCP webpage) so that an authorized representative of the foundation can submit a preauthorization request on the donor’s behalf using VDOE’s secure Web-based system.  All preauthorization requests submitted by scholarship foundations on behalf of donors will be immediately approved for the amount of the request, as long as the request meets the minimum and maximum donation criteria (see below), and tax credits are available to preauthorize.  The submitting scholarship foundation will be able to immediately email the Preauthorization Notice issued by VDOE to the donor.  The donor must provide a completed Request for Preauthorization for Tax Credits form (available on the main EISTCP webpage) to the scholarship foundation.  (Full SSNs must not be emailed, so a full SSN is not included on Preauthorization Notice issued by VDOE upon approval.)
  • Option 2: The Donor mails the completed Request for Preauthorization for Tax Credits form to Department of Education, Tax Credit Programs 23rd Floor, PO Box 2120, Richmond, VA 23218-2120.  The paper request will be processed manually and the Preauthorization Notice will be mailed directly to the donor via U.S. Mail.   This option should not be selected if a donation must be made by a deadline.

What is the tax credit approval process?

Once the Department has issued a Preauthorization Notice, within 180 days of the date of the Preauthorization Notice, the donor sends a qualified monetary or marketable securities donation with the completed Preauthorization Notice to the scholarship foundation.

The scholarship must submit the completed Preauthorization Notice and proof of the date and amount of donation within 40 calendar days from the date of the donation using the Department’s secure Web-based system.  For donations of marketable securities, a scholarship foundation must submit evidence that the marketable securities were sold and converted into cash no more than 21 calendar days after the date of the donation. 

After VDOE reviews the donation to ensure that it is a qualified donation, made within 180 calendar days from the date of the Preauthorization Notice, and received from the foundation within 40 calendar days form the date of the donation, VDOE will approve the donation for a tax credit (up to the amount preauthorized) within 30 calendar days and the tax credit certificate will be available to the scholarship foundation to email to the donor. 

Note

**Please be aware that any Notice not acted upon by the donor within 180 calendar days of issuance, or made in a timely manner but not submitted by the scholarship foundation to VDOE within 40 calendar days, will become void and not eligible for the tax credit.**

Legislative Reports

Reports to the Chairmen of the House and Senate Finance Committees on Scholarships Awarded

Contact

Tax Credit Programs
Email: tax.credits@doe.virginia.gov