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Our Letter to the US Secretary of the Treasury and the Office of Management and Budget Regarding Deductions from Tax-Credit Contributions

The Children's Tuition Fund of Rhode Island

Overview

The Rhode Island Scholarship Tax Credit allows businesses to assist lower-income families afford private school education for children in return for a substantial tax credit.  

Eligibility

Eligible businesses can choose to make a 1-year or 2-year commitment to the scholarship tax credit program. A 1-year commitment results in a 75% tax credit while a 2-year commitment results in a 90% tax credit with a maximum credit of $100,000. Therefore, a business can contribute up to $111,111 per year. Contributors can also claim the contribution as an itemized deduction on federal returns, although the state deduction will be reduced, since the donor is paying less tax. Taxpayers subject to the Alternative Minimum Tax realize even greater benefits than those outlined below.  The scholarship tax credit program has a total tax credit cap of $1.5 million dollars, meaning once the program has reached $1.5 million in approved tax credits from eligible businesses, no further tax credit applications will be accepted until the start of the next fiscal year. If the cap has not been used for the calendar year, then a business can apply at the beginning of the business's fiscal year. Businesses can choose to make a two-year contribution commitment which will maximize the amount of tax credit they can receive (example scenarios below).

Business Application Timeline

  • Businesses must apply for qualified tax credits-up to $100,000 annually through the Rhode Island Division of Taxation. Within 30 days of the application submittal due date (July 1), approval or denial will be granted from the Division of Taxation. Approved businesses have 120 days to make the contribution to their selected SGO(s).
  • The program is limited to $1.5 million in approved tax credits annually. Once the annual cap is reached no more tax credits will be approved until the following year.

How Does a Contribution Become a Scholarship?

Scholarship tax credit contributions are given to certified Scholarship Granting Organizations (SGOs), such as CTF of Rhode Island, by the contributing business. The business chooses the SGO and directs the SGO as to which schools the business wants to support through its contribution. The school then converts the contribution into scholarships.

For more information email the Program Administrator of the ACSI Children's Tuition Fund or call 717.285.3022.

Additional information can be found at www.RIscholarshipalliance.org

 

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