NCPA - National Center for Policy Analysis

Tax Credit Scholarships Create Academic Opportunities

August 29, 2014

Brittany Corona, research assistant at the Heritage Foundation, reports that 14 states across the nation have tuition tax credit programs, enabling students to enroll in schools that they may otherwise not be able to access.

Florida is one of those tax credit states. Sophia Flores, mother of Jorge Perez, identifies Florida's tax credit scholarship program as the reason that her son Jorge will be attending Columbia University this fall. In 2003, Flores used the tax credit to enroll her son in the Academy Prep Center in Tampa. After graduating at the top of his eighth grade class, her son received an academic scholarship to a private boarding school. He graduated from high school in the spring and will begin college this fall.

How do tax credit scholarships work? Corona explains that private businesses or individuals will make donations to nonprofit organizations that grant tuition scholarships to students. Those individuals making donations receive a tax credit for their contributions, the amount of which varies among states. Some states will match the tax credit up to 100 percent of the donor's state income tax liability.

The tax credit serves to encourage donations to the scholarship programs, which in turn provide tuition funds to low-income students to attend a private school.

Of all school choice measures, tax credit scholarships received the highest amount of support in Education Next's 2014 poll, with 60 percent of respondents indicating support for the scholarship programs.

Some states also have personal-use tax credits, which allow parents to receive a tax credit for their own children's educational expenses.

Source: Brittany Corona, "Tuition Tax Credit Scholarships: Advancing School Choice Through Charitable Contributions," Daily Signal, August 27, 2014.

 

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