••• Education •••

Oklahoma passes universal tax credit scholarship program

Oklahoma joined a string of states that have established/increased school choice alternatives in the past several months. Much of what these states have done to expand school choice is a result of the academic and social impact of overzealous pandemic-related school closings, mandates and the like. Oklahoma, which already has two school choice programs targeted toward special populations, passed a universal approach, the Oklahoma Parental Choice Tax Credit Program in May of this year.

Here are some relevant FAQs regarding the program, which begins in the 2024 tax year. Please be aware that these FAQs do not answer all the questions with regards to the Oklahoma Parental Tax Credit Program. As with any new program, the state is in the progress of working out many rules and regulations that will define how the program is administered.

Q. Who is eligible to participate?

A. It is a truly universal program. Every student in the state is who is eligible to be in a public school is eligible for the tax credit, including students as young as four.

Q. How does the program work?

A. A taxpayer is allowed to claim a state income tax credit up to $7,500 (depending on income level), for what are considered “qualified expenses.”

Q. Do you have to be the student’s parent to qualify?

A. No, the person could also be any person with legal authority to act on behalf of the student, including grandparents, aunt and uncles, or any other legal guardian.

Q. What are these “qualified expenses”?

A. The state considers “qualified expenses” to include tuition and fees at a state accredited school or a school accredited by some non-governmental accrediting association.

Q. Are homeschoolers included?

A. Yes. Homeschoolers are eligible for a credit up to $1,000 per student for qualified homeschool expenses.

Q. What expenses are included?

A. Homeschool expenses include:

    • Tuition an fees for online learning programs
    • Tutoring provided by individuals or a private academic organization
    • Textbooks, curriculum and other instructional materials
    • Fees for standardized tests, including college admission, advanced placement and related prep courses

Q. How do taxpayers actually receive the money from the state?

A. For those enrolling in private schools, the state will pay 50% of the tuition up front. Homeschoolers will have to provide receipts to be reimbursed when filing their state income return.

Q. Does every student qualify for a $7,500 tax credit?

A. No. The amount of the credit depends on a taxpayer’s adjusted gross income (AGI). Only taxpayers with an AGI of $75,000 and less qualify for up to a $7,500 credit. The credit decreases in steps as AGI increases. Taxpayers with an AGI of $250,000 and higher are eligible for a credit up to $5,000. The actual amount credited is the lesser of the “up to” amount and the actual cost of tuition and fees.

Q. What if I don’t have that much state income tax liability?

A. If the tax-credit amount exceeds your state income tax liability, the remainder will be refunded by the state in either the form of a debit card or direct deposit.

Q. When does the program start?

A. It begins in the 2024 tax year, meaning January of 2024.

Q. How do I claim the credit?

A. When Oklahomans file their 2024 taxes, include qualified expense receipts.

Oklahoma is to be lauded for expanding school choice, especially one that is universal and not just for the benefit of a particular group. After all, choice – any kind of choice – should never be at the government’s discretion. According to edChoice, there are 22 states with some form of tax credit scholarship program. The Oklahoma Parental Choice Tax Credit Program is a different approach to this type of school choice.

Next: How Oklahoma’s program compares to the Kansas and other states’ tax credit scholarship programs.