Financial Opportunities Uncovered: A Keeler & Nadler Family Wealth Podcast

Free Money for Schools: The Tax Credit No One Told You About

• Andy Keeler

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Discover a little-known opportunity that allows Ohio taxpayers to redirect their state income tax dollars to private school scholarships—at absolutely no cost to themselves. This game-changing program gives you direct control over a portion of your tax dollars while providing vital financial support to K-12 non-public education.

Jake Martin, CFP, joins host Andy Keeler to unveil the Scholarship Granting Organization (SGO) tax credit, a powerful but underutilized program introduced in Ohio in 2021. Unlike typical charitable deductions, this dollar-for-dollar tax credit means your $750 (individual) or $1,500 (couple) donation costs you nothing—the state essentially returns every penny through reduced tax liability. The impact? When multiple supporters participate, schools can raise hundreds of thousands in scholarship funding annually.

The conversation breaks down exactly how the process works, who qualifies, and the simple steps to participate. You'll learn why this opportunity extends far beyond parents to include grandparents, friends, teachers, and anyone who pays Ohio income taxes. Jake shares real examples of how schools have leveraged this program to dramatically increase scholarship funding, making private education accessible to more families while strengthening school financial stability.

Whether you have children in private school, support educational choice, or simply want more control over your tax dollars, this episode reveals a straightforward strategy that benefits schools without costing you a dime. Connect with your school administrators to help them organize participation or reach out directly to our Keeler and Nadler team with questions about implementing this opportunity in your community

The opinions expressed in this program are for general informational purposes only and are not intended to provide specific advice or recommendations.

It is only intended to provide education about finance, tax, retirement and related planning topics. To determine which investments or strategies may be appropriate for you, consult your financial, tax or legal advisor prior to implementing. Any past performance discussed during this program is no guarantee of future results.

Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.

Keeler & Nadler Family Wealth is a registered investment adviser. Advisory services are only offered to clients or prospective clients where Keeler & Nadler Family Wealth and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Keeler & Nadler Family Wealth unless a client service agreement is in place.


Speaker 1:

Have you ever wondered if there was a way to get more scholarship funding for your kids or grandkids school? If you have a child or grandchild that attends a non-public K-12 school in Ohio, this episode is for you. Today, on Financial Opportunities Uncovered, we dive into a recent change in Ohio called the Scholarship Granting Organization, or SGO tax credit that allows taxpayers to steer funds to their school of choice at no net cost to themselves. I'm joined today by Jake Martin CFP, who will guide us through this opportunity. How are you doing, jake?

Speaker 2:

I'm doing great, Andy. Thanks for having me again through this opportunity. How are you doing, Jake? I'm doing great, Andy. Thanks for having me again. As a parent with two small kids in private Catholic school, this topic affects me personally, and so I'm very passionate about making other people aware of it because it's just such an incredible opportunity.

Speaker 1:

Well, you know, a lot of the topics that we come up with for this podcast are things that I've always been curious about. I know a little bit or a lot about, and I want my listeners to really understand. This is one that, frankly, I knew nothing about, never had heard about it. Jake was a guest on one of our other podcasts and he's one of our new team members, so he brings with him years of experience in the financial planning industry, advising high net worth clients, and so it's these kinds of opportunities that I'm, frankly, embarrassed I didn't know about.

Speaker 2:

Well, Andy, you're not alone. I mean, this is actually a relatively new tax credit. It just came out in late 2021. So I mean, frankly, this is still very much new news, and even schools that could benefit from this have not heard of it yet.

Speaker 1:

So I'm not that far behind.

Speaker 2:

You're not alone at all.

Speaker 1:

So let's start with the big picture. Why should people care about redirecting their Ohio tax dollars to a school?

Speaker 2:

First of all I just want to start with if you live and work in Ohio, you are going to pay state income taxes. Sure, it's just a fact of living here in the state right, and normally you don't have any discretion over how those dollars are used other than going to the ballot box, but otherwise you have no discretion over how those dollars are used. This tax credit is a bit of an exception to that rule in that you actually have the ability to redirect some of the tax dollars that you're already going to pay to a school that you care about Interesting. So this tax credit just has a tremendous potential for schools who really get organized around it. I've seen some schools that have raised $50,000, $100,000, even $300,000 in scholarship funding for their schools and, by the way, this is repeat funding that can happen year after year for year.

Speaker 1:

So what exactly is the scholarship granting organization tax credit and how does it work?

Speaker 2:

The SGO tax credit. It's a non-refundable state tax credit, and non-refundable simply means that you have to actually owe those taxes in order to get it back. So if you don't owe any state taxes, this doesn't work for you. You have to actually owe those taxes in order to get it back. So if you don't owe any state taxes, this doesn't work for you. You have to actually owe the taxes to have them refunded to you. For individuals that make a donation, you can get up to $750 back on your tax return, and for couples, you can get up to $1,500 back. So here's how it works Basically you can make a gift to a school of your choice either $750 if you're an individual or $1,500 if you're a couple.

Speaker 2:

That donation has to be used specifically for scholarships. So I just want to quickly note that unfortunately this doesn't apply to public schools, because public schools don't have tuition that a scholarship could cover. If any non-public school, any private school, religious school, anything like that is potentially eligible for this, and so when you make that gift, then when you file your tax return, you get a dollar for dollar credit back on your taxes, and this is a credit, not a deduction. So you literally I make a gift of $1,500, I get $1,500 back. Costs me nothing in the end, end of the day.

Speaker 1:

So again, it's really a way for a taxpayer, slash resident, slash voter to take control over how Ohio state income tax revenue is spent. That's exactly right it gives you direct control over the small little sliver of it. That's really interesting.

Speaker 2:

Yep, you're not paying anything extra than you otherwise would. You're just simply taking the dollars you already were going to pay to the state of Ohio and directing it to a school that you care about.

Speaker 1:

Very cool. This is not a tax deduction, it's a tax credit. So can you kind of explain to listeners the difference? Right, yeah?

Speaker 2:

Most people are familiar with deductions and that just means that it reduces your taxable income. So if you have a $1,000 deduction, that might only be worth $250 to you in real tax terms. A credit is different. A credit is literally dollars back in your pocket Dollar for dollar, dollar for dollar If I give $1,500, I get $1,500 back.

Speaker 1:

Right, okay, can you give us some real-world examples of how this program can benefit an actual school?

Speaker 2:

Yeah, well, again, this affects me personally. My kids go to a Catholic school here in town. I've helped my school try to get organized around this. So just for some simple math, if 66 families participate at that $1,500 level, that amounts to $100,000 of scholarship funding. Just think about that. 66 families, that's to $100,000 of scholarship funding. Just think about that. 66 families, that's not even a large percentage of most schools. I'm just looking around at the families that I know. My kids are in a classroom with about 20 other kids. If I could just get my classroom to participate we could raise almost $50,000 right there. Now if you think a little bit broader than that, if 200 families participate now, you're talking about $300,000 of scholarship funding. That's not a crazy proposition. Most schools have at least that number of families attending their school. I just really want people to realize what this means potentially for private and religious schools. You suddenly, if you have several hundred thousand dollars of additional funding that allows the school to grant scholarships to students that otherwise may not be able to afford to attend there.

Speaker 1:

I want to rewind a second, maybe go sort of high level. The state can use tax credits and the federal government does the same thing. They use tax credits to encourage certain behaviors. It could be a child tax credit. What's that encouraging? Well, we want high birth rates so that we have labor 10, 20, 30 years down the road to keep our national economy competitive and strong. Okay, so let's walk through the steps. If someone wants to take advantage of this tax credit, what should they do?

Speaker 2:

It's really a fairly simple process. I want to emphasize that gifts directly to the school actually don't qualify. You have to do it through something called a scholarship-granting organization, and so usually a school itself will participate in a larger organization that is dedicated for this purpose. So, for example, I know the Catholic system because my kids go there, so I'm going to use that as the example, but please know that this goes broader than just Catholic schools. So, using Catholic schools as an example, the Columbus Diocese has a scholarship-granting organization set up to receive these donations. So first I need to make my $1,500 gift to the Catholic Diocese, to their SGO, and then from there I need to designate the school that I want it to go to.

Speaker 2:

Now I don't want to make this sound more complicated than it is. There's a simple website that I go to. I punch in how much I want to give the school I want it to go to and, boom, I can punch in my credit card and it's done. It takes me less than two minutes to complete, so this is not a hard process. I think that the biggest thing is just finding out one does your school participate and, if so, which SGO do they use in order to receive those donations. Once you figure that out, you just go onto that SGO website, make the donation, and then I also want to emphasize and so you'll receive a letter in the mail usually saying, yes, you gave $1,500 to this SGO. You just want to hold on to that, because the state of Ohio may ask for proof of the donation when you file your taxes.

Speaker 1:

And so is there anything special that they need to do to ensure that their chosen school gets the funds?

Speaker 2:

Yeah, and I mentioned this a little bit before but you have to make sure that the SGO knows which school you want it to go to. So, again, using my kids as an example, if I just gave the $1,500 to the Columbus Diocese but I didn't designate my kid's school, then the diocese would have the discretion to send it to any Catholic school that they want to. But I think most people listening to this would want that donation to go to a specific school.

Speaker 1:

Some listeners might be thinking why should I do this? Or does my regular charitable gift qualify?

Speaker 2:

Those are great questions. Again, the key difference is that this is a tax credit, not a deduction, and also that it has to be given through that SGO that I was talking about before. So, for example, for the Columbus Diocese they have a scholarship fund called the Emmaus Road Scholarship Fund. That is their SGO that you have to make gifts to. So if you're making gifts directly to your school, that's great. I encourage you to keep doing that. But for this particular tax credit that would not qualify. You've got to go through the SGO first.

Speaker 1:

What if somebody can't afford to give right now?

Speaker 2:

I love this question. Charitable giving is something that really needs to come from the heart, but I always like to emphasize that at the end of the day, this doesn't actually cost you anything. So really, what it's a matter of is simply cash flow, and can you afford to give up $1,500 for a few weeks or a few months before you get it back on your tax return right? Ultimately, it doesn't cost you anything. It's just a matter of can I free up the cash for a short period of time to make the gift to the school? There are some easy ways to mitigate this.

Speaker 2:

One cool thing about this credit and this actually just changed last year is the Ohio legislature allowed these gifts to be made all the way up until your tax filing deadline. So if you really want to keep that period of time short, wait until early April, make your gift and then turn around, file your taxes and you get it right back a few weeks later. So this doesn't have to be a big outlay. It's really just a matter of can I do without that $1,500 for a few weeks?

Speaker 1:

Are there any specific pitfalls to watch or other things to watch out for?

Speaker 2:

Yeah, there's a few that I like to note. I mentioned this earlier. That one you want to keep proof of the donation to the state of Ohio because you're going to have to submit that later when you file your taxes, that later when you file your taxes. The other thing that I alluded to earlier is that you actually have to have taxable income equal or greater to than the gift that you're making. So if you don't make a whole lot of Ohio State income, then this may not work for you. So you have to make sure that you owe at least that amount to the state of Ohio.

Speaker 1:

And who's likely to benefit from this credit? Are there certain income thresholds?

Speaker 2:

That's where I really like to do some basic math here to give people an idea of what they would have to earn in order to fully qualify for this credit. So, for example, in 2025 in Ohio, if you're a single individual and your taxable income is over $40,500, then you probably will owe at least $750. Now I put a big asterisk on that. There's a lot of different things that can happen in individual situations. So obviously you want to check your own tax return. Refer to your tax professional For couples. If you earn over $68,000 of taxable income, then generally you will owe at least $1,500 or more. So again, check with your advisor. But those are just rough thresholds where, if you're making more than that, you can probably qualify for the full credit.

Speaker 1:

So clearly. We've addressed the benefits to the taxpayer or client for participating in this. It's sort of like, why not? What are the benefits to the taxpayer or client for participating in this? It's sort of like, why not? What are the benefits to the institutions? Why is it so important that people participate?

Speaker 2:

This is where I really get passionate, because I think you're already demonstrating passion.

Speaker 1:

Am I passionate enough? He's going to get more passionate.

Speaker 2:

More passionate. For me as an individual, giving $1,500, that's great, but I wouldn't call that life-changing money for an entire school, $1,500 is just not going to move the needle Right. But if we can get many families involved, like I mentioned earlier, now we're talking about $100,000, $200,000, $300,000. That's meaningful money that can really move the needle for a single school. That's why I just think it's so important that as many people know about this as possible, because the more people that participate the better. The other thing is I want to emphasize this isn't just limited to the parents of students going to the school. Teachers and administrators that work at these schools can also participate. Grandparents, siblings, friends. Anyone who lives and pays taxes in Ohio and has some interest in a school that they want to support can do this tax credit.

Speaker 1:

Very important point. So are we friends.

Speaker 2:

We are friends, yes, okay.

Speaker 1:

So as a friend even though I don't have a horse in this race, I could participate and send money to your school, that's exactly right. I think we have at least one other employee here that has kids in a private school. In theory, the whole company, everybody could do it for you guys.

Speaker 2:

That's exactly right. I want grandparents to know about this. I want friends and siblings and everyone else. The more that participate, the better for the school.

Speaker 1:

All right, so we need to make this podcast required listening for every employee in the office, if it isn't already. Well, jake, thanks for breaking down this opportunity. Any final advice?

Speaker 2:

Just remember to consult your tax advisor before making this decision to make sure that you've got enough taxable income to fully qualify for this tax credit. And then I also just want to offer again I'm so passionate about this topic I'd be happy to come out and speak to school administrators or school boards and things like that nature to help schools get organized and really start to get this effort underway, if it isn't already. So feel free to reach out to me directly. My email address is my name, jakemartin at knwealthcom. If you'd like me to come out and speak to a group of people about how this works, I'd be happy to do that.

Speaker 1:

Good deal. Well, thanks, jake, for turning over the sleeve for me and our listeners and, as always, we thank our listeners. I'm Andy Keeler and this is Financial Opportunities Uncovered brought to you by Keeler and Nadler Family Wealth. If you have questions on anything you heard in this episode or have an idea for a future episode, connect with us on LinkedIn or shoot me an email at andykeeler at knwealthcom dot Keeler at canwealthcom.

Speaker 3:

The opinions expressed in this program are for general information purposes only and are not intended to provide specific advice or recommendations. It is only intended to provide education about finance, tax, retirement and related planning topics. To determine which investment strategies are appropriate for you, consult your finance, tax or legal advisor prior to implementing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always, please remember, investing involves risk and possible loss of principle. Please seek advice from a licensed professional. Keillor and Nadler Family Wealth is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Keillor Adler Family Wealth and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Keillor Adler Family Wealth unless a client service agreement is in place. Thank you.