The Children’s Promise Act Tax Credit for Businesses

A tax credit is available for voluntary cash contributions to an eligible Qualifying Foster Care Charitable Organization (QFCCO). The tax credit is only available to a taxpayer who is a business enterprise engaged in commercial, industrial or professional activities and operating as a corporation, limited liability company, partnership, or sole proprietorship. The credit is allowed against income tax, insurance premium tax, and insurance premium retaliatory tax. A contribution to an eligible charitable organization used for the Eligible Charitable Business Contribution Tax Credit cannot be used for the Charitable Business Contribution Tax Credit or Foster Care Charitable Tax Credit. A contribution, for which an Eligible Charitable Business Contribution Tax Credit is claimed, may not be used as a deduction by the taxpayer for state income tax purposes.

A QFCCO means a qualifying charitable organization that each year provides services to at least 100 qualified individuals in this state and spends at least 50% of its budget on services to qualified individuals in this state. A “qualified individual” means a child in foster care placement program established by the Department of Child Protection Services, a foster care placement program established by the Department of Child Protection Services, a child placed under the Safe Families for Children model, or a child at significant risk of entering a foster care placement program established by the Department of Child Protection Services.

• The taxpayer must apply for the tax credit on the form prescribed by the Mississippi Department of Revenue.

• In the application, the taxpayer must certify to the department the dollar amount of the contribution made or to be made during the calendar year.

• Within thirty (30) days after receipt of the application, the Mississippi Department of Revenue shall allocate tax credits based on the dollar amount of the contribution as certified in the application.

• Once the Mississippi Department of Revenue has allocated credits to a taxpayer, the taxpayer must make the contribution and send the verification of the contribution to the Mississippi Department of Revenue. Verification sent by the taxpayer to Mississippi Department of Revenue must be received within sixty (60) days from the date of the allocation notification.

• If the contribution is not made within sixty (60) days, the allocation will be cancelled and returned to the Mississippi Department of Revenue for reallocation.

• Business taxpayers may donate and receive a dollar-for-dollar tax credit for up to 50% of the taxpayer’s Mississippi State tax liability.

• For pass-through entities, each partner, member or shareholder may offset up to 50% of his/her individual Mississippi tax liability if the credit is sufficient.

You may only claim a tax credit for your charitable contribution on your Mississippi state tax return if the organization you donated to is considered an Eligible Charitable Organization.

You cannot claim both a deduction and a credit for the same charitable contribution on your Mississippi tax return.

The Children’s Promise Act tax credit is only a dollar-for-dollar reduction on your Mississippi State taxes. Consult with your tax professional for questions about deductions on your Federal Return.

• The Mississippi Department of Revenue will allocate credits within a calendar year.

• The tax credits authorized under the Children’s Promise Act are limited to $5,000,000 per calendar year.

• The Children’s Promise Act allows for allocations each calendar year beginning January 1, 2024.

Charitable Tax Credit dollars may be carried forward for up to five years, reducing future tax liability.