What to Know About the Virginia College Access Tax Credit

The Virginia College Access Tax Credit encourages private contributions to support higher education for students in need. This state tax incentive is for donors who contribute to approved scholarship foundations, increasing the availability of scholarships for low-income students at Virginia’s colleges. The program provides a tax credit to donors, reducing their state tax liability. It is administered by the Virginia Department of Education, which oversees the approval of foundations and the allocation of tax credits.

Taxpayer and Contribution Eligibility

Individuals, married couples filing jointly, and various business entities can participate, including C-corporations, S-corporations, limited liability companies (LLCs), and partnerships. To qualify for the credit, the contribution must be made in the form of money or marketable securities, not a pledge or a non-monetary gift of property. The contribution must be directed to a scholarship foundation that has been pre-approved by the Virginia Department of Education. The Department maintains a public list of these approved foundations.

Credit Calculation and Limitations

The tax credit is calculated as 65% of the total value of the donation. An individual’s donation must be at least $500 in a single taxable year to qualify, and for businesses, the minimum donation is $616. Once this minimum is met, subsequent donations within the same year do not have a minimum amount.

For individuals and married couples, the maximum donation eligible for the credit is $125,000 per year, while there is no maximum donation limit for business entities. If the credit exceeds the taxpayer’s total Virginia tax liability, the unused portion can be carried forward for up to five consecutive years.

The Pre-Authorization Process

A donor must obtain pre-authorization from the Virginia Department of Education before making any contribution. Failure to secure this approval in advance will render the donation ineligible for the tax credit. The process begins with completing a Tax Credit Request Form, available from the Department of Education’s website.

The form requires the donor’s full name, address, and Social Security Number (for individuals) or Federal Employer Identification Number (for businesses). The donor must also specify the total amount they intend to donate and select the approved scholarship foundation. The completed form can be submitted to the Department of Education or provided to the chosen scholarship foundation to submit on the donor’s behalf. Once the request is approved, the Department of Education issues a Tax Credit Certificate, which the donor must receive before making the donation.

Claiming the Credit on Your Tax Return

After receiving pre-authorization, making the donation, and getting a confirmation receipt from the scholarship foundation, the final step is to claim the credit on your Virginia state income tax return. You must have the Tax Credit Certificate from the Department of Education before you can file for the credit.

The credit is claimed by completing Virginia’s Schedule CR, the form used to report various tax credits. On this schedule, you will report the amount of the approved credit as indicated on your certificate. The completed Schedule CR must be submitted with your primary Virginia tax return (Form 760 for individuals), and it is important to attach the Tax Credit Certificate as documentation.