The growing cost of private school and higher education costs keeps growing, and it’s critical for families who have children that attend private institutions or choose to homeschool are aware of all the available benefits. The Oklahoma Parental Choice Tax Credit Act is a fairly new legislation that aims to provide financial assistance through a refundable tax credit – up to $7,500 per student.
This act, signed into law in May 2023, aims to make private school education less of a barrier for families who believe a private school or homeschool environment best meets their child’s educational needs.
Private School Families
These are the levels of support that eligible private school students can receive based on their family’s household income:
- $7,500 tax credit per student in households earning under $75,000 annually.
- $7,000 tax credit per student in households earning between $75,000-$150,000 annually.
- $6,500 tax credit per student in households earning between $150,001-$225,000 annually.
- $6,000 tax credit per student in households earning between $225,001-$250,000 annually.
- $5,000 tax credit per student in households earning over $250,001 annually.
Please note that the above information outlines the maximum limits of the tax credit program. If a student applies for the tax credit and their private school expenses are less than $5,000, the family will receive the exact amount that covers the tuition and fees without any additional funds.
It is important to highlight that the tax credit amount will cover the full cost of tuition and fees at numerous private schools in Oklahoma, although not all. For a comprehensive list of recent tuition figures for private schools in Oklahoma, please refer to the Oklahoma Council of Public Affairs.
Homeschooled Families
If you have a child who is homeschooled, then you are also eligible to participate in this refundable tax credit. Families who homeschool can receive a tax credit of up to $1,000 for qualified expenses per student. Qualifying expenses for homeschoolers may cover private online learning courses, academic tutoring, textbooks, curriculum, instructional materials, and fees for nationally standardized tests.
How to Get Started
This act aims to effectively remove financial obstacles for families in choosing their child’s school. However, if a child is enrolled full-time in a free traditional public school, charter school, public online school, or magnet school, the family will not be eligible for the tax credit. Let’s delve into the practical workings of this program.
Who Sets Up the Program?
- The Oklahoma Tax Commission will set up an application and assign a deadline for families to apply to the program. The program will launch in 2024, and the application deadline is set to be announced soon.
How Will They Know Where My Child Attends?
- Participating families will submit an affidavit from the private school they are enrolled in or will enroll in, which will need the tuition and fees listed.
When Do I Receive the Tax Credit? If applicable.
- Families who qualify will receive the tax credit in two installments throughout the year. Typically, each installment will cover half of the anticipated tuition and fees at their private school. In cases where the private school expenses exceed the child’s tax credit allowance, the installment will be half of the allotment for the child’s tax credit.
How Much is Available in Funding?
- Up to $150 million is available in the first year for private school families statewide to claim in credits. That number increases to $200 million in 2025 and $250 million in subsequent years. The cap for total tax credits for homeschooling expenses will be $5 million per year.
In Oklahoma, parents who participate will receive a government check or direct deposit for the amount of the tax credit. These funds are a refund on eligible families’ state income tax bills and will be provided in advance so families do not have to wait until the end of the tax year to receive the money. If a family spends more on approved education expenses in a year than they owe in taxes, they will still keep any credit that exceeds their state tax liability.
If you have any questions regarding this new act and how it can potentially affect your finances, your decision to send your child to a private institution or more – please give us a call.
Tyler Miller
Tax Manager
Category: Tax and Accounting Team
