When the landmark Early Learning Collaborative Act passed in 2013, the legislation established high-quality, state-funded prekindergarten for the first time in Mississippi. But the legislation was also a watershed moment in state history because it created a unique 1:1 tax credit.
This 1:1 tax credit, referred to as the prekindergarten credit, allows individuals or businesses who make a contribution to support an approved early learning collaborative to receive a state tax credit for the donated amount. Individuals or businesses can donate up to $1 million in a single year and qualify for the credit.
Tax credits are generally more valuable than tax deductions because they decrease one’s tax liability instead of one’s taxable income. For example, if an individual or business earned $50,000 in taxable income in a year and they are required to pay 20% in taxes, they will have a $10,000 tax liability. During the tax year, if that individual or business also made a qualifying donation of $2,000 to their local collaborative, they can claim a $2,000 tax credit, which will reduce their tax liability, or the amount owed, to $8,000. The same individual or business with a $2,000 tax deduction would owe $9,600 because they would still owe the full 20% in taxes, just on a smaller taxable income.
The Mississippi Department of Revenue can approve 1:1 tax credits up to the amount the state Legislature appropriates to the Early Learning Collaborative Act each year. In 2022, the Legislature appropriated $24 million. This means that $24 million is available in state prekindergarten tax credits for individuals and businesses.
“Businesses should take advantage of this incredible opportunity to reduce the amount owed on their state taxes, while also ensuring their dollars remain in their local communities,” said Micayla Tatum, associate director of Early Childhood Policy at Mississippi First, an education policy nonprofit that advocates for a continued legislative commitment to the early learning collaboratives.
Over the years, collaboratives across the state have received millions of dollars in donations.
In 2016, for example, the Tallahatchie Early Learning Alliance (TELA) received more than $340,000 in donations. According to the Mississippi Department of Education, donors have given over $1 million in 2022 so far, but because donors decide where to give and most give to the collaborative nearest them, many of these dollars have gone to other programs, not to TELA, Tallahatchie County’s collaborative.
TELA is hoping that more awareness of the tax credit will encourage the community to support early learning with donations this season.
“TELA is still a community-focused organization that brings together every voice in the county to cultivate engagement, education and advocacy for children from birth to age 8 and their families,” said Leigh Sargent, the executive director of TELA. “COVID has taught us a lot about the need for quality early childhood education, and above all, it taught us how resilient we are. We need the continued support and donations to meet the needs of our children and families.”
As an attorney at Thomas U. Reynolds law firm in Charleston, a 43-year veteran of the Mississippi House of Representatives and a continuous donor to the Tallahatchie pre-K collaborative, Tommy Reynolds shared, “I think that we have to give priority to the younger generation. It is important that they are filled with knowledge and know-how to learn. Early childhood education is the key to later success in learning and in life.”
Donating to the early learning collaboratives is a simple process. To donate to TELA, contact Leigh Sargent at leigh@wearetela.org or 504- 400-2785. Following the donation, the Mississippi Department of Education will issue a donation certificate. The donor must use form 80-401 on the Department of Revenue’s website to claim the credit when filing their state tax return at the beginning of the new year.
“I recommend this program to everyone. In my work, I work with prenatal moms and babies from zero to 5. I know how important access to resources and quality education is to student success. I have now seen firsthand how a program like this has changed my daughter’s life. It isn’t just about preparing kids for school; it prepares them for life,” noted Kiara Brooks, the parent of a former TELA student.
Now is a great time to donate to TELA as the end of the year approaches and there are still many tax credits available.
A donation to TELA is not only a donation to high-quality pre-K, but also a donation to the future health and well-being of Tallahatchie County.
