Important Changes to the Ohio Scholarship Donation Credit – 2024 Update

Published on January 12, 2024 by Barnes Dennig in Tax Services

This is an update to a previous post on the Ohio Scholarship Donation Credit.

Reducing your income taxes while benefiting a charitable organization at the same time provides a welcome opportunity for many taxpayers. The State of Ohio introduced the Ohio Scholarship Donation Credit in 2021, and it continues to be in effect for 2023 for individuals paying Ohio taxes this year.

The credit is available for those making financial donations to an eligible Scholarship-Granting Organization (SGO).

The credit is up to $750 (individual) or $1,500 (married filing jointly).  If you file a married joint return, each taxpayer will need to make their own $750 contribution to claim the maximum tax credit of $1,500. The credit is also limited to the total Ohio State income tax due for the 2023 tax year.

If a married couple owes at least $1,500 of Ohio state tax, they can make qualifying contributions at no net cost to them.  The donor can contribute that amount to a qualified SGO and receive a tax credit from the state of Ohio, which lowers the donor’s tax due by $1,500 in this example.

If a donation is made to a qualified SGO before the unextended tax return due date of April 15^th, 2024, the taxpayer can claim 100% of the donation on their 2023 tax return subject to the limits listed above. The same contribution cannot be used to claim the credit in two tax years.

Gifts must be made to a qualified SGO.  According to the Ohio Attorney General’s Office, the criteria for being a qualified SGO are:

1. Be a religious or non-religious non-profit organization exempt from federal taxation under section 501(a) of the Internal Revenue Code as an organization described in section 501(c)(3) of the Internal Revenue Code.
2. Primarily award academic scholarships for students to attend primary and secondary schools (K-12).
3. Prioritize awarding scholarships to low-income primary and secondary school students.
4. Comply with all registration and reporting requirements with the Ohio Attorney General applicable under the Ohio Charitable Trust Act, Ohio Revised Code (ORC) ORC 109.23-109.32, and/or the Ohio Charitable Organizations Act, ORC Chapter 1716.

Here’s a list of SGO organizations for ease of reference.

No credit can be earned for donations to a non-qualified SGO.

Have a question about the tax credit or want to discuss other aspects of your tax planning? You might be interested in top estate planning tools and strategies, or how grantor trusts can help maximize your wealth. If you have questions, please contact your Barnes Dennig tax advisor. As always, we’re here to help.

 

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