The Children’s Promise Act was passed earlier this year during the 2019 regular session of the Mississippi Legislature. The focus of this Act is to provide much-needed assistance to Mississippi’s foster care systems and providers of educational services to disadvantaged students. Most non-profit (Section 501(c)(3)) schools should qualify as beneficiaries under this program.
To incentivize individuals and businesses to donate to these programs, the Children’s Promise Act allows a tax credit for Mississippi taxpayers to divert up to $2.5 million in state tax liability from the Department of Revenue to the non-profit organizations receiving the donation. The credit is taken in the year that the contribution is made and is limited to 50% of the donor’s tax liability. Any amount not used can be carried forward and used against 50% of tax liability in each of the following five years.
The Children’s Promise Act has two parts: one that establishes $2.5 million in tax credits for donors who support children in foster care and the other establishes $2.5 million in tax credits for those who support 501(c)(3) charitable organizations that provide educational services to children at significant risk of entering foster care, children who have a chronic illness or disability, and children eligible for free or reduced-price meals programs.
Once a school is recognized as an eligible entity, donors will contact DOR, notifying them of their intent to donate to the school. Once the prospective donor has received authorization from DOR, they have 60 days to make the gift. The Act allows donors to give directly to the approved entity and contains no restrictions on the use of the amounts received. However, the $2.5 million in credits will likely be claimed quickly, so it’s important to follow the steps outlined above to ensure your donation is eligible for the tax credit.
If you have questions or need assistance filling out your application, contact Mitch Beckwith.