Education Opportunity Account (EOA) Program Tax Credit -2

​Total Available EOA Program Tax Credit as of July 1, 2021 (Amount is updated as applications are approved. Check back often!)
​For Fiscal Year Ending June 30, 2022:	​$25,000,000
​Amount Allocated to Date:	​$0
​Remaining Amount Available to Taxpayers:	​$25,000,000

What is the EOA Program Tax Credit?

The EOA program tax credit is a nonrefundable and nontransferable credit that may be applied against income taxes imposed by KRS 141.020 (individual income tax) or KRS 141.040 (corporation income tax) and the limited liability entity tax (LLET) imposed by KRS 141.0401. 

Credit Calculation:  The credit is calculated based upon contributions made during the taxable year to one or more qualified Account-Granting Organizations (AGOs) in accordance with the EOA Program. 

Credit Amount Awarded:  The credit amount awarded per taxpayer per taxable year shall be no more than the lesser of:  95% of the total contributions made to an AGO, except for multi-year pledges described below; or $1,000,000. 

Multi-Year Pledges:  If a multi-year pledge is made by the taxpayer and the amount of the contributions for each of the multiple taxable years is equal to or more than the amount of contributions made to the AGO in the taxable year within which the pledge is made, the amount of allowable credit shall be increased to 97% in the taxable year within which the pledge is made and for each pledged year. If the taxpayer does not remit the pledged amount of contributions during any taxable year for which a multi-year pledge is made, the taxpayer shall repay the portion of the credit resulting from this increase. The multi-year pledge cannot exceed a total of four taxable years. 

Carryforward:  The EOA program tax credit can be carried forward up to five succeeding years on your income tax return. 

How Do I Apply for the EOA Program Tax Credit?

Beginning the Process:  To apply for preliminary approval of the tax credit, file a Preliminary Application for Education Opportunity Account Program Tax Credit (EOA Tax Credit Application) with DOR. The EOA Tax Credit Application may be filed by the taxpayer or by the AGO acting on behalf of the taxpayer. 

Annual Cap:  The total annual tax credit cap awarded shall not exceed $25,000,000. 

First-Come, First-Served:  The tax credit is awarded on a first-come, first-served basis. The date and time stamp from each application for preapproval will establish the order in which the application was received. For contributions pledged for multiple tax years, the contribution shall be considered the first in line for the years subsequent to the initial year of the pledge. 

DOR Review Timeframe:  Subject to the annual tax credit cap, DOR will review all preliminary applications received and provide notice of the preliminary approval to the taxpayer and the AGO within 10 business days of receipt of the application. 

Contribution Timing Requirements:  The taxpayer must make the preapproved contribution to the AGO by the earlier of:  15 business days, excluding weekends and holidays, following the date of DOR's preapproval notice; or June 30 of the fiscal year of the preapproval.

Contributions of Marketable Securities:  If the preapproved contribution is made in marketable securities, the AGO must monetize the securities within 5 business days of receipt, excluding weekends and holidays, and notify DOR within 10 business days of the monetization. If the monetized value is less than the proposed contribution, the taxpayer may supplement the contribution with additional cash to equal the amount of contribution reflected on the application. The taxpayer shall not receive preapproval for a tax credit in excess of the amount of proposed contribution reflected on the application.

AGO Certification of Contribution:  Within 10 days of when the contribution has been made, the AGO shall certify to DOR:  the name of the taxpayer, amount of the contribution made, and the date on which the contribution was made. 

DOR Updating Requirements:  Upon receipt of certification that the contribution has been made or the expiration of the 10 day period without certification, whichever occurs first, DOR shall modify:  the amount of credit pending certification, the amount of credit allocated to taxpayers, and the remaining credit available for allocation, as applicable.

Who Can Claim the Credit?

​Pass-through Entities:  A pass-through entity (partnership, S-Corporation, LLC, general partnership, trust, etc.) may apply the tax credit against the LLET on its Kentucky Income and LLET Return and pass the credit through to its members, partners, or shareholders in the same proportion as the distributive share of income or loss is passed through with the ordering of the credits under KRS 141.0205. The income or loss is reported on the Kentucky Schedule K-1 and any credit that is passed through to the members, partners, or shareholders may be used against individual income tax or corporate income tax and LLET.  Individuals:  A sole proprietor reporting business income on Schedule C (federal Form 1040) may claim the credit under the business name. An individual may also claim the credit if it is passed through to them from a pass-through entity on a Kentucky Schedule K-1.  If a taxpayer and spouse are entitled to claim the credit, the credit may be wholly claimed if they file jointly, but must be split if they file separately. If the application lists only one of the spouse's names, the listed spouse is entitled to claim the full credit.  Corporations:  A corporation may apply the tax credit against income tax and LLET on its Kentucky Corporation Income Tax and LLET Return. A corporation may also claim the credit if it is passed through to them from a pass-through entity on a Kentucky Schedule K-1.