Help Schools While Saving Taxes

by Senator Brent Hill

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Idaho is offering a huge income tax break that will save you taxes and help our local schools: a temporary tax credit for contributions to schools located within the state. In some cases, the credit can eliminate more than half of your state income taxes and save on your federal taxes too. This is too good of an opportunity to pass up. But to take advantage of the tax credit for this year, the donation must be made before the year ends.

The Idaho tax credit equals 50% of the contribution and is limited to 50% of an individual taxpayer’s state income tax liability. The maximum annual amount of the credit is $1,000 on a jointly filed return and $500 for a single taxpayer. Corporations are entitled to even greater tax savings up to $5,000, but the credit is limited to 10% of the corporation’s state tax.

Here’s how it works:  A husband and wife contribute $1,000 to their child’s school. They file a joint income tax return in which they itemize their deductions and they are in the 15% federal income tax bracket. The donation is fully tax deductible, resulting in combined federal and state income tax savings of $228. In addition, their Idaho income taxes are reduced another $500 by the education tax credit (50% of the $1,000 donation). As a result, the $1,000 donation to the school only costs them $272 out of pocket. (Please note that tax savings may differ depending on income tax brackets and whether or not the donors itemize their deductions.) People who once thought they could only afford to give $250 to the school can now give $1,000 and not have it cost them much more than the $250 they were planning to give up.

Cash donations to Parent-Teacher Organizations, education foundations and public or private colleges and universities within the state qualify for the tax credit. Contributions can also be designated for the school district as a whole, for individual schools or even for specific programs such as the orchestra or athletics.

Our schools are facing dwindling financial resources affecting classrooms and activities. The Idaho Education Credit is a powerful and effective tool designed to help our school system. Our classrooms can enjoy much-needed assistance at a small cost to us. We must not let this opportunity pass.

More details, including answers to frequently-asked questions about this Education Tax Credit can be found online here.