Ray Carter | October 25, 2023

Oklahoma school-choice tax credit implementation advances

Ray Carter

The Oklahoma Tax Commission has approved emergency rules that will allow Oklahoma’s new school-choice program to take effect and help families at all income levels pay for private school for their children starting in the spring semester of the current 2023-2024 school year.

The rules now go to Gov. Kevin Stitt for final approval within 45 days. If the governor supports the rules as expected, they will take effect and Oklahoma families will be able to apply for refundable tax credits to pay for private-school tuition starting on Dec. 1.

Under the Oklahoma Parental Choice Tax Credit Act, created through passage of House Bill 1934 this year, all families in Oklahoma are eligible for refundable tax credits of $5,000 to $7,500 per child to pay for private-school tuition with the largest tax credits going to lower-income families. The size of the tax credits declines as income rises. Because the tax credits are refundable, even if a family’s tax obligation is less than the size of the school-choice tax credit, the family still receives the full benefit of the entire credit.

The amount of tax credits issued is capped at $150 million but will increase to $200 million in 2025 and then $250 million in 2026. Under the law, lower-income families are given priority if the program hits the cap in any year.

Under the emergency rules approved by the Tax Commission, which are necessary for administration of the program, the application process for tax year 2024 will begin on Dec. 1 at 8:30 a.m. For any family with federal adjusted gross income of less than $150,000, applications must be submitted to the Tax Commission on or before Feb. 1, 2024, to receive priority consideration.

Oklahoma Tax Commission executive director Doug Linehan said the agency received close to 1,000 comments from members of the public. He said the agency attempted to address many concerns raised by citizens about the initial draft of the rules.

Among other things, the version of the rules approved by the commission no longer requires families to file a separate form for each child, as would have been required under the initial draft. Instead, families fill out only one form regardless of the number of children eligible for the tax credit.

The agency also eliminated a requirement for private schools to collect and report the Social Security numbers of children that benefit from the tax-credit program.

“We’re trying to simplify,” Linehan said. “Simply the taxpayer experience. Simplify the school experience.”

However, commission officials indicated that lawmakers need to pass additional legislation to address some concerns raised by critics to maximize the program’s benefit to all Oklahomans.

Among those concerns is that the commission has indicated that the tax credits could be considered taxable income for the 2025 tax year.

The agency also said it can only operate the program on a calendar-year basis under existing law. Supporters of the school-choice program have said it should be administered on a school-year basis since many families, particularly low-income families moving a child to private school for the first time, will not know in January if their child will be admitted to a private school the following August.

Ray Carter Director, Center for Independent Journalism

Ray Carter

Director, Center for Independent Journalism

Ray Carter is the director of OCPA’s Center for Independent Journalism. He has two decades of experience in journalism and communications. He previously served as senior Capitol reporter for The Journal Record, media director for the Oklahoma House of Representatives, and chief editorial writer at The Oklahoman. As a reporter for The Journal Record, Carter received 12 Carl Rogan Awards in four years—including awards for investigative reporting, general news reporting, feature writing, spot news reporting, business reporting, and sports reporting. While at The Oklahoman, he was the recipient of several awards, including first place in the editorial writing category of the Associated Press/Oklahoma News Executives Carl Rogan Memorial News Excellence Competition for an editorial on the history of racism in the Oklahoma legislature.

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