Over the last two years, Scholarship Granting Organizations (SGOs) have gained popularity in Ohio. SGOs provide need-based scholarships to students at affiliated private schools. Many Ohio taxpayers who give to these organizations can receive an SGO tax credit of up to $750, or $1,500 if married, potentially making the gift at zero cost to themselves. The first SGOs were set up in December 2021, and the list of schools supported by an SGO has since grown substantially.
How to Find an SGO in Ohio
You can find a list of SGOs on the Ohio Attorney General’s website. The SGO certification is an annual application, so the list of eligible SGOs can change over time. We recommend verifying that the SGO has an active certification before making a gift.
If you have a school in mind and aren’t sure whether it’s supported by an SGO, we suggest contacting the school or searching their website to find out whether they are affiliated with an SGO. Because many SGOs support several schools, the name of a specific school may not show up on Ohio’s list of SGOs.
For example, the Archdiocese of Cincinnati has an SGO that supports K-12 Catholic schools in Cincinnati. When you make a gift to this SGO, you can specify which school’s scholarship fund you want to support.
How the Ohio Scholarship Donation Credit in Ohio Works
To claim a 2023 Ohio Scholarship Donation Credit, you would make a donation to an SGO before April 15, 2024. (Note that the donation must be made to the SGO, not the school itself.) The SGO would then provide a letter to attach to your tax return as documentation. When filing your 2023 tax return in 2024, you would claim the corresponding dollar-for-dollar SGO tax credit (with limitations, as described below).
The maximum contribution eligible for the SGO Ohio tax credit in Ohio is $750 for single or $1,500 for married filers. However, if your Ohio tax liability is less than those respective amounts, your tax credit would be limited to the amount of your Ohio tax liability, as the credit is nonrefundable. For example, if you give $750 to an SGO but your Ohio tax liability is only $500, you would receive a credit of $500 and would not get the other $250 back.
For married taxpayers, each taxpayer should make a separate gift of $750, rather than one joint $1,500 gift, to claim the maximum credit.
The Foster & Motley team works hard to stay on top of tax planning opportunities, like SGOs and the Ohio Scholarship Donation Credit. If you’re unsure how much your Ohio taxes will be, we assist with tax planning and can work with your CPA to help you understand your current tax situation and help you plan for the future in a tax-conscious manner. Contact us to learn more.
Sources:
https://codes.ohio.gov/ohio-revised-code/section-5747.73
https://tax.ohio.gov/individual/resources/scholarship-donation-credit