top of page
  • Writer's picture Treavor Dodsworth CFP®, CPA, CKA®

#109 - Charitable Tax Credit

Charitable Tax Credit

Many states around the country offer tax credits for certain charitable contributions.

While I do not recommend giving solely for the tax deduction/credit, as it will typically not make sense from a financial or charitable standpoint, I do recommend taking advantage of tax benefits you qualify for.

One of the charitable tax credits in Indiana is called the Scholarships for Education Choice program. With this program, donors contribute to Scholarship Granting Organizations (SGO), and then that SGO provides scholarships to eligible students.

A donation to the SGO qualifies the donor for a non-refundable (limited carryforward available) 50% state tax credit if there are still credits available to be awarded. You can click the link to see if there are still credits available for the program's fiscal year (July 1 - June 30).

Not only does the donor qualify for a 50% state tax credit but they may be able to take a federal charitable itemized deduction for the other 50% and a federal state/local tax itemized deduction for the first 50% (subject to SALT cap).

In other words, if an individual in the 22% tax bracket that itemizes deductions donates $1,000 they could receive a $500 reduction of state taxes and potentially a $220 reduction of federal taxes. Therefore, this hypothetical donor reduced their taxes by $720 by making a $1,000 charitable contribution.

I recently found out you can designate Shepherd Community Academy as the school when donating to the SGO Institute for Quality Education (hence what sparked this email) and am excited to support the work of Shepherd in a tax-efficient manner.

While the above program I mentioned is for Indiana, there are programs for different types of contributions in many different states around the country. There are several limits and exceptions to the above, therefore please review your individual situation specifically. What percentage the state allows as a tax credit could change how it is treated from a federal perspective.

When making charitable contributions, don’t forget to take into consideration state tax credits.

Thank you for reading!


Thanks! Message sent.

All written content on this website is for information purposes only. Opinions expressed herein are solely those of Sycomore Financial, unless otherwise specifically cited.  Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. The owner of this website takes great care to thoroughly research the information provided to ensure that it is accurate and current. Nonetheless, the content on this website is not intended to provide tax, legal, accounting, financial, or professional advice, and readers are advised to seek out qualified professionals that provide advice on these issues. All information or ideas provided should be discussed in detail with an advisor, accountant, legal counsel, and/or other pertinent professionals prior to implementation. In addition, the owner cannot guarantee that the information on this website has not been outdated or otherwise rendered incorrect by subsequent new research, legislation, or other changes in law or binding guidance. Neither Sycomore Financial or it's owner shall have any liability or responsibility to any individual or entity with respect to losses or damages caused or alleged to be caused, directly or indirectly, by the information contained on this website. In addition, any advice, articles, or commentary included on this website do not constitute a tax opinion and are not intended or written to be used, nor can they be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. Any mention of an investment product or solution is not a recommendation to buy or sell. ETFs that are mentioned may not accurately reflect the market segment mentioned. Past performance is not a guarantee of future results. Any mention of rates or return should not be seen as a guarantee those rates or return will be received.

bottom of page