In August of 2017 the State of Illinois legislature passed a new act called the “Invest in Kids Act of 2017”. This Act created an Illinois income tax credit for taxpayers who make authorized contributions to qualifying Scholarship Granting Organizations (SGO), which are registered with the Illinois Department of Revenue (IDOR) by December 31, 2017. Starting January 2, 2018 taxpayers can apply for the credit, which would be reported on their 2018 state income tax return. The maximum credit the State will award each year is $75 million, representing total contributions of $100 million, with a contribution limit of $1 million per taxpayer. Couples who are married and file a joint tax return are considered one taxpayer for purposes of this Act.
SGO’s are designed to provide scholarship opportunities for eligible Illinois students to attend non-public schools in Illinois. The Illinois State Board of Education will provide a list of non-public schools recognized under section 2-3.25o of the School Code to the Illinois Department of Revenue each year. This list will be used to allocate the credits amongst the 5 regions in the state. The regional boundaries are the same as those of the Illinois Appellate court districts. You can see the 5 regions at the following link: http://www.revenue.state.il.us/InvestInKids/Regions.htm
SGO’s must be non-profit and tax exempt under Section 501(c)(3) of the Internal Revenue Code. After approval by the IDOR, SGO’s can receive qualified contributions from individuals and businesses, which are then disbursed in the form of scholarships to eligible students.
An eligible student is a member of a household whose federal adjusted gross income the year before he or she initially receives a scholarship under this program, as determined by the Department, does not exceed 300% of the federal poverty level and, once the child receives a scholarship, does not exceed 400% of the federal poverty level.
As of Dec. 1, 2017, these federal poverty guidelines are as follows:
In addition, the student must be eligible to attend a public elementary school or high school in Illinois in the semester immediately preceding the semester for which he or she first receives a scholarship, or is starting school in Illinois for the first time when he or she