By Hannah Schmid | Illinois Policy Institute
A new local billboard is garnering media attention by advertising that Illinois taxpayers can get a federal income tax credit for donating money to students out of state.
The billboard, in south suburban Chicago near the Indiana border, refers to the Federal Scholarship Tax Credit, also known as the Education Freedom Tax Credit. The program offers taxpayers a dollar-for-dollar income tax credit for donations of up to $1,700 per year to qualified scholarship-granting organizations.
Any taxpayer in any state can claim the credit starting in 2027. But only students in states whose governor has opted into the program can benefit from the donated education money.
Gov. J.B. Pritzker has not opted Illinois in. Four of Illinois’ neighbors have, including Indiana, where the billboard is advertising Illinoisans to donate scholarship money.
The billboard is correct:
- If Pritzker opts Illinois in: Donated money flows to eligible Illinois students.
- If Pritzker does not opt Illinois in: Illinois donors can still claim the federal tax credit by contributing to qualifying scholarship-granting organizations in participating states such as Indiana, but Illinois students cannot receive any of the donated money.
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