Oklahoma sets rules for parents seeking private school tuition tax credits: What to know

The Oklahoma Tax Commission has approved submitted emergency rules to implement the state’s new school choice tax credits. The approval was unanimous, but the rules must still be approved by Gov. Kevin Stitt.

If Stitt doesn’t sign the emergency rules within 45 days from Tuesday, then they automatically expire. Legislative leaders also have said they might tweak the rules during next year’s session.

Passage of legislation to provide financial support to the families of private school children was a major accomplishment of the 2023 legislative session earlier in the year, but details about how the new program would work have taken months to work out.

On Wednesday, there were indications from a legislative leader that even with the governor's approval of the new rules, the program may still be in flux.

“The pro tem has acknowledged there may need to be a legislative fix concerning some of the rules surrounding the School Choice Tax Credits,” said Alex Gerszewski, communications director for Senate President Pro Tem Greg Treat, R-Oklahoma City.

“However, he is pleased with the collaboration and progress the Tax Commission has made in formulating the rules thus far. The biggest and most important takeaways are — the money is there for school choice, the application process is set to start on time next month and will help Oklahoma families get the best education for their kids.”  Here are three things to know about the school choice tax credits:

Who is eligible for school choice tax credits?

Families with children attending private K-12 schools that are accredited by either the State Board of Education or another accrediting association are eligible for refundable tax credits, with the size of the tax credit depending on the household’s income. Families who make less than $150,000 receive first preference.   If the household’s annual income is under $75,000, families are eligible for a $7,500-per-child credit. If the income is between $75,000 and $150,000, the per-child credit is $7,000; if the income is between $150,000 and $225,000, it’s $6,500; and if the income is between $225,000 and $250,000, it’s $6,000.  For households with an annual income exceeding $250,000, the maximum credit allowed is $5,000 per student. Families of students who are homeschools can apply for a credit of up to $1,000 per child.

What expenses can the tax credits cover?

According to the commission's provisional rules, the tax credits can cover “qualified expenses” related to education, which are defined as tuition and fees at an accredited private school. They also include enrollment, registration or application fees; textbook fees; technology fees; activity fees; testing and assessment fees; and school uniform fees, if those fees are paid directly to the school.  For home-schooled students, the qualified expenses include tuition and fees for nonpublic online learning programs; academic tutoring services; textbooks, curriculum or other instructional materials; fees for nationally standardized assessments, including those used to determine college admission and advanced placement exams. They also include expenses for tutoring or preparatory courses for those assessments.

When and how can taxpayers apply?

The timeline for submitting applications for the tax credits this year will be Dec. 1, starting at 8:30 a.m., for the 2024 tax year. The application deadlines closes Dec. 31 of the year the educational expenses were incurred, or until the program’s annual cap is met, whichever comes first.

Parents or legal guardians of qualifying students will apply online. For more information, visit the Oklahoma Tax Commission.

For the coming year, the legislature capped private school tax credits expenditures at $150 million. The spending cap increases by $50 million each year for another two years.

If there are more applications than the appropriation will cover, families making less than $150,000 a year will get priority receiving the tax credit.

Homeschooling expenses are capped at $5 million per year, or at least 5,000 families.

According to an Associated Press report, at least four states — Arizona, Florida, Iowa and Ohio ― that have established taxpayer-funded scholarships to private schools are seeing more families using the programs than planned.

It's especially an issue in states like Arizona and Iowa, where — as in Oklahoma — families whose children were already in private school can now take advantage of public funding.

"It busts the budget because it's taking on as a public expense what's previously been a private cost," said Josh Cowen, an education policy professor at Michigan State University.

Oklahoma avoided that problem with its cap on total expenditures.

The tax credit must be claimed through submitting an application to the Oklahoma Tax Commission — not on an Oklahoma state tax return. Each application must come with an affidavit from the private school in which a student is enrolled, to verify enrollment and the cost of attendance at the school.

This article originally appeared on Oklahoman: What to know about Oklahoma's new private school tax credit plan