What Is Virginia's Private School Tax Credit?
Virginia's private school tax credit is the Education Improvement Scholarships Tax Credits (EISTC) program: donors who give to approved scholarship foundations receive a 65% Virginia tax credit, and the foundations award tuition scholarships to eligible private school students.
For families with Virginia tax liability, EISTC can effectively reduce the cost of military school by up to 65% through a combination of tax credits and charitable deductions.
How Does the EISTC Tax Credit Work?
The EISTC program allows individuals and businesses to donate to approved Scholarship Foundations. In return, donors receive:
- 65% Virginia tax credit on donations
- Federal charitable deduction on the remaining amount
- Scholarship funds distributed to eligible students
The net effect: A $10,000 donation might cost you only $2,000-3,000 out of pocket after credits and deductions.
Who Benefits
Donors:
- Virginia taxpayers with state tax liability
- Business owners (corporate tax credits available)
- Families who want to help fund their own child's scholarship (through foundation programs)
Students:
- Must attend a participating private school
- Must meet scholarship foundation's criteria (often need-based)
- Must be Virginia residents
Which Virginia Military Schools Participate in EISTC?
Virginia has the highest concentration of traditional military schools in the country. Schools that may participate in EISTC scholarship foundations include:
- Fork Union Military Academy (Fork Union) — Grades 7-12, boarding
- Fishburne Military School (Waynesboro) — Grades 7-12, boarding
- Hargrave Military Academy (Chatham) — Grades 7-12, boarding
- Massanutten Military Academy (Woodstock) — Grades 7-12, boarding
- Benedictine College Preparatory (Richmond) — Grades 7-12, day
- Randolph-Macon Academy (Front Royal) — Grades 6-12, boarding
Contact each school's admissions office to confirm their scholarship foundation participation.
The Math: How 65% Works
Example: $10,000 Donation
| Benefit | Amount |
|---|---|
| Virginia tax credit (65%) | $6,500 |
| Remaining donation | $3,500 |
| Federal deduction value (~25% bracket) | $875 |
| Net cost of $10,000 donation | ~$2,625 |
This means a family in the 25% federal bracket effectively donates $10,000 for about $2,625 out of pocket.
How to Participate
Step 1: Find a Scholarship Foundation Each school typically partners with a scholarship foundation. Contact admissions to identify theirs.
Step 2: Verify Eligibility
- Confirm you have Virginia tax liability
- Confirm the foundation is EISTC-approved
- Understand the scholarship criteria
Step 3: Make the Donation Donations must be made to the foundation (not directly to the school).
Step 4: Claim the Credit File Virginia Form 500CR with your tax return.
Step 5: Student Applies for Scholarship Your student applies through the foundation's process.
Important Limitations
- Tax credit cap: Individual credits capped at $125,000 per year
- Program cap: Statewide cap on total credits issued
- Cannot be a quid pro quo: Donations cannot be explicitly conditioned on your child receiving the scholarship
- Timing matters: Donations must be made in the tax year you want the credit
Combining with Other Funding
EISTC works alongside other funding sources:
- 529 plans: Use for tuition, books, and fees
- School financial aid: Apply for need-based aid
- Payment plans: Many schools offer monthly payment options
For Business Owners
Virginia businesses can donate and receive corporate tax credits, making this an effective strategy for:
- S-Corp and LLC owners
- Business owners who want to support military education
- Pass-through entity owners with Virginia tax liability
Questions to Ask the School
- "Do you have a scholarship foundation that participates in EISTC?"
- "What is the application process for scholarships?"
- "What criteria does your foundation use for awards?"
- "When are donation and application deadlines?"
- "Can you connect me with the foundation coordinator?"
Resources
- Virginia Department of Education EISTC page
- Your school's admissions and financial aid office
- A Virginia tax professional for personalized advice
Key Takeaways
- EISTC provides a 65% state tax credit for donations to scholarship foundations
- Virginia has the highest concentration of military schools in the country
- The net cost of giving is significantly reduced through credits and deductions
- Contact your target school to identify their scholarship foundation
- Work with a tax professional to maximize benefits
Next Steps
Browse all Virginia military schools in our directory. Learn more about military school costs and funding options. If you have tax liability in both states, compare Pennsylvania's EITC and OSTC tax credits. Understand how to evaluate military schools when visiting Virginia's many options.