Neighborhood Assistance Act
The Virginia Department of Education (VDOE) administers the Neighborhood Assistance Act Tax Credit Program for Education, which allows individuals or businesses to receive state tax credits for eligible contributions made to approved neighborhood organizations that provide scholastic instruction or scholastic assistance to low-income persons or eligible students with a disability. Under this tax credit program, an individual or business may earn a tax credit equal to 65 percent of the qualified donation to an approved neighborhood organization.
The minimum donation eligible for tax credits in a taxable year is $500 for individuals and $615.39 for businesses. For donations made on and after January 1, 2013, the maximum aggregate amount of tax credits that may be issued to an individual in a taxable year is $81,250, which equates to a maximum aggregate amount of donations of $125,000 in a taxable year, provided that all tax credits are allocated to participating organizations in a program year. The maximum aggregate amount of donations is only applied on an individual basis. There is no maximum donation limitation for businesses.
For an organization to become eligible for participation in the Neighborhood Assistance Act Tax Credit Program for Education, and to receive and administer an allocation of tax credits, the organization and any of its affiliates must meet the following criteria:
- An Applicant is a local, regional or statewide organization providing neighborhood education assistance.
- An Applicant holds a ruling from the Internal Revenue Service of the United States Department of the Treasury that the organization is exempt from income taxation under the provisions of §§ 501(c)(3) and 501(c)(4) of the Internal Revenue Code of 1986, as amended from time to time, or that the organization defined as a community action agency in the Economic Opportunity Act of 1964 (42 U.S.C. § 2701 et seq.), or any housing authority as defined in § 36-3.
- An Applicant must be able to demonstrate that at least 50 percent of the total persons served are low-income persons or eligible students with a disability.
- An Applicant’s audit must not contain any significant findings or areas of concern for the ongoing operation of the neighborhood organization.
- An independent Certified Public Accountant has certified that at least 50 percent of the Applicant’s revenues are used to provide services to low-income persons or to eligible students with disabilities. For purposes of this requirement, “revenues” are defined in accordance with Generally Accepted Accounting Principles (GAAP) and “investments” are considered used to provide neighborhood education assistance as long as principal, interest, and dividends will not used for another purpose.
- An Applicant has been in existence for one (1) year by the start of the program year, which begins July 1.
For more information about the tax credit program or how to apply to become an approved neighborhood organization, please refer to the Guidelines for the Neighborhood Assistance Act Tax Credit for Education and the related forms and instructions provided below.
The Guidelines for the Neighborhood Assistance Act Tax Credit Program for Education adopted by the Board of Education on January 10, 2013, are being revised to conform with recent legislative changes. The draft guidelines are provided below.
• DRAFT Guidelines for the Neighborhood Assistance Act Tax Credit Program for Education (PDF) (revised June 24, 2013)
§§58.1-439.18 through 58.1-439.22, and § 58.1-439.24 of the Code of Virginia
2012 Acts of Assembly, Chapter 731, Senate Bill 131 and Chapter 842, House Bill 321
2013 Acts of Assembly, Chapter 802, Senate Bill 1009
2013 Acts of Assembly, Chapter 713, Senate Bill 1227 and Chapter 716, House Bill 1996
Todd L. Gathje, Ph.D., Tax Credit Program Specialist
- Guidelines for the Neighborhood Assistance Act Tax Credit Program for Education (PDF)
- 2013 Federal Poverty Guidelines
- 2012-2013 Approved Organizations (PDF)
- 2013-2014 Approved Organizations (PDF)
- Forms and instructions for donors making a contribution to a neighborhood organization: