Tax credits on the horizon for Oklahoma private schoolers, homeschoolers

Oklahoma families who choose private school or homeschooling will have access to new state programs to help make their school choice more affordable starting in January 2024. Here’s what you need to know to get ready!

What is the Oklahoma Parental Choice Tax Credit Act?

The Oklahoma Parental Choice Tax Credit Act, signed into law in May 2023, provides participating families a refundable tax credit — up to $7,500 per student — for eligible learning expenses. The law aims to make sure tuition isn’t a barrier for families who believe a private school or homeschool environment best meets their child’s educational needs. As the bill reads, “Parents and legal guardians are best suited to make choices to help children in this state reach their full potential and achieve a brighter future.” 

To this end, the new law allows all students enrolling in an accredited private school or homeschool to apply for a refundable income tax credit. While open to all, the program has a tiered approach that offers the most funds to students with the greatest need. Students who choose a private school and whose household income is less than $75,000 annually are eligible for the largest tax credit amount of $7,500.

Oklahoma Parental Choice Tax Credit for private school students

Here are the tiers 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

Keep in mind that these are the upper limits of the tax credit program. If a student applies for the tax credit and their private school costs less than $5,000, the family will receive the amount that covers the actual tuition and fees, not more!

The tax credit amount will fully cover tuition and fees at many, though not all, of Oklahoma’s private schools. For reference, you can find a list of recent tuition numbers for more than 80 of Oklahoma’s private schools at the Oklahoma Council of Public Affairs.

Oklahoma Parental Choice Tax Credit for homeschoolers

Homeschoolers are also eligible to participate in the Oklahoma Parental Choice Tax Credit Program. Families who homeschool can receive a tax credit of up to $1,000 for qualified expenses per student. Qualifying expenses for homeschoolers can include tuition and fees for private online learning courses, academic tutoring, textbooks, curriculum, and instructional material, and fees for nationally standardized tests. 

How families participate in the program

Since this program is focused on eliminating cost barriers to school choices, a family cannot claim the credit while their child is enrolled full-time in a free traditional public school, charter school, public online school, or magnet school. Here are details on how the Oklahoma Parental Choice Tax Credit Program will work, practically-speaking:

To apply for tax credit, families should head to Oklahoma Parental Tax Credit. Applications are accepted starting December 6th, 2023 with the 60-day priority period extending through February 5th, 2024.

Although there are almost 200 private schools across the state of Oklahoma, not all private schools participate in the Parental Choice Tax Credit tax credit. Are there schools you’re interested in that participate in the tax credit program? To find out, check the list of participating schools at the Oklahoma Parental Tax Credit.

Participating families will submit an affidavit from the private school they are enrolled in or will enroll in. This should have the tuition and fees clearly listed. 

Participating families will receive their tax credit in two installments during the year. In most cases, each of these installments will be half of the expected tuition and fees at their private school. (Or, if the private school costs more than a child’s program allotment, the installment will be half of the child’s tax credit allotment.)

Participating families will keep the receipts for all qualifying expenses as proof. Each year they claim the tax credit, they should be ready to submit these receipts if requested. 

In the first year of the program, up to $150 million is available 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. 

While Oklahoma’s new program is labeled a “tax credit,” it’s worth noting that the program works differently than the tax-credit scholarships that states like Kansas and Montana have set up. In those states, private donations fund school scholarships granted by non-profit organizations.

In Oklahoma’s case, participating parents will receive a check or direct deposit from the government for the tax-credit amount. These funds are technically a refund on eligible families’ state income tax bills and will be pre-funded so families won’t have to wait until the end of a tax year to receive funds. If a family spends more on approved education expenses in a year than they owe in taxes, the family still keeps any credit that exceeds their state tax liability. 

Other school choice scholarships in Oklahoma

In addition to this new program, Oklahoma has a few other programs already in place to support private school choice. The Lindsey Nicole Henry Scholarships for Students with Disabilities Program provides private school vouchers for students with an individualized education plan (IEP) or who were served by the state’s foster care program. Students who receive a Lindsey Nicole Henry Scholarship can apply for the Oklahoma Parental Tax Credit Program too. They can use funding from both laws at the same time! 

Oklahoma also offers a tax-credit scholarship program, the Oklahoma Equal Opportunity Education Scholarships Program, to support low and middle-income students who wish to choose private school. The average scholarship size is about $2,600. This program adds important bridge funding to further support a family’s ability to exercise educational choice. 

Learn more

In addition to the Oklahoma Parental Tax Credit Act, Oklahoma’s legislature also passed laws providing for teacher pay raises and additional funding for local districts in the state budget this year. These new programs make it clear the Oklahoma community cares deeply about education options. Oklahoma’s tax-credit program comes as part of a wave of new school choice laws across the country this year. Other states creating or expanding programs in 2023 include Arkansas, Iowa, Florida, Utah, Indiana, Kansas, Nebraska, Montana, and South Carolina.

Answers to frequently asked questions are already available at the Oklahoma Tax Commission website. If you’d like to learn more, also keep an eye on the Oklahoma State Department of Education’s school choice page for updates.