Virginia

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Virginia: education tax credit and voucher programs

Virginia's one private school choice program is a state tax credit for donations to scholarship foundations approved by the Virginia Department of Education, which give need-based scholarships for private schools and some pre-K programs. Under current law the credit is set to end unless the General Assembly extends it.

Last checked 2026-10-16

State programs Opted into FSTC for 2027; list due Feb 15

Donor tax credit for scholarship gifts

Education Improvement Scholarships Tax Credits Program

Individuals and businesses that give to a scholarship foundation approved by the Virginia Department of Education can receive a state tax credit, but only if the gift is preauthorized by the Department before it is made; credits are issued first come, first served until the yearly statewide limit is reached, and unused credit carries forward for up to five years. The foundations give scholarships for private K-12 schools and some pre-K programs to students from lower- and middle-income households.

A state tax credit of 65% of the donation for tax year 2026. An individual's donations count from $500 up to $125,000 in a tax year, with no upper limit for businesses, and credits statewide are capped at $25 million a fiscal year.

For families

Scholarships under the Education Improvement Scholarships Tax Credits Program are given by scholarship foundations, not by the state. Each foundation is a 501(c)(3) organization approved by the Virginia Department of Education, which publishes a yearly list of approved foundations. A foundation pays the scholarship directly to the school and may not limit its scholarships to students at a single school.

Under current law, a scholarship can go to a Virginia student in kindergarten through grade 12 whose household income is no more than 300% of the federal poverty guidelines, or no more than 400% for a student with an individualized education program (IEP). Some pre-kindergarten children who are considered at risk can also qualify, under separate tests.

A student in kindergarten through grade 12 must also meet one of these conditions: attended a Virginia public school for at least half of the current or the prior year, received one of these scholarships before, is entering kindergarten or first grade, or moved to Virginia from another state. Under the version of the law in force through tax year 2027, a student with an IEP does not have to meet this condition.

A scholarship can be no larger than the student's actual qualified expenses or the state's per-pupil share of Standards of Quality funding for the student's locality, whichever is less. The limit is higher for some students with disabilities who attend a licensed special education school that meets the law's accreditation requirement.

A private school can take scholarship students if it is accredited through the Virginia Council for Private Education, or if it gives its scholarship students a national norm-referenced test each year. It must also meet health, safety and building occupancy requirements and federal civil rights requirements under Title VI.

For donors

The credit is for gifts of cash or marketable securities to a foundation on the Virginia Department of Education's list. It can be applied against Virginia individual income tax, corporate income tax, bank franchise tax, insurance premiums license tax and public service corporation taxes. When the donor is a partnership, an S corporation or a limited liability company, the credit passes to its partners, shareholders or members in proportion to their ownership.

A gift earns the credit only if it is preauthorized before it is made. The steps in the law are:

  1. The donor, or the foundation on the donor's behalf, asks the Virginia Department of Education for preauthorization, and the preauthorization notice goes with the gift. A preauthorization not acted on within 180 days is void.
  2. Within 40 days, the foundation returns the notice to the Department, certifying the value, type and date of the gift.
  3. The Department then issues a tax credit certificate within 30 days.
  4. An individual claims the credit on Virginia Schedule CR. On the form for tax year 2025 it is Part 26, Education Improvement Scholarships Tax Credit.

Under current law, no new credits can be earned for tax years beginning on or after January 1, 2028.

Key dates

  • 2027-02-15: Last day for a state that has made an advance election to give the IRS its list of scholarship granting organizations for 2027
  • 2027-06-30: Last day for each approved scholarship foundation to give out at least 90 percent of the credited donations it received in the year that ended June 30, 2026
  • 2027-09-30: Yearly report from each approved scholarship foundation to the Virginia Department of Education is due
  • 2028-01-01: Under current law, donations earn the state credit only in tax years that begin before this date

The federal tax credit in Virginia

Virginia has made an advance election to take part in the Federal Scholarship Tax Credit for 2027. The election takes effect only if the state gives the IRS its list of scholarship granting organizations by February 15, 2027.

Federal Scholarship Tax Credit in Virginia

Fundraising rules in Virginia

Registering a charity or school

Virginia requires a charity to register with the Virginia Department of Agriculture and Consumer Services before it solicits there and to renew each year, and a school accredited by one of the bodies the law lists, or one that asks only its own students, alumni, faculty, trustees and their families, is exempt only after it files an exemption application and receives a letter of exemption. Churches that meet the law's conditions are outside it but other religious organizations have no exemption of their own, and neither the law nor the department settles whether a parish school that is part of a parish counts as a church, whether accreditation through a body recognized by the Virginia Council for Private Education meets the law's list, or whether a school keeps its exemption after hiring a paid solicitor or fundraising counsel, which the exemption application warns ends some exemptions without saying which.

Professional solicitors

Anyone paid to ask for gifts for a charity, and anyone paid to plan, manage or advise on a solicitation who does not meet the test for fundraising counsel, must register with the Virginia Department of Agriculture and Consumer Services before acting. The solicitor files each contract at least 10 days before it starts, a sworn solicitation notice before each campaign and a final accounting within 90 days after each campaign. It may not solicit for a charity that is neither registered nor exempt, and must state in each solicitation that it is a paid solicitor and that financial reports are available from the department.

Fundraising counsel

Fundraising counsel must register with the Virginia Department of Agriculture and Consumer Services before acting and file each written agreement within 10 days after signing it. Counsel status covers only a person paid a flat fixed fee under a written agreement to plan, manage or advise on a solicitation who asks no one for gifts, so a paid adviser or manager paid in any other way counts as a professional solicitor.

Check a solicitor's or fundraising counsel's registration

Virginia charity and professional solicitor search (VDACS Evoke portal)

References

Regulator: Virginia Department of Agriculture and Consumer Services, Office of Charitable and Regulatory Programs

Official sources

Questions? Contact us

This page is informational and is not tax or legal advice.

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