Education Tax-Credit Model Legislation

Purpose Statement of Legislative Intent

Children benefit most from education when parent involvement is high. Therefore, creating a system that incentivizes parent involvement will benefit children, and American education overall.

Parents are best equipped to determine the optimal educational choice for their child’s unique needs. Therefore, creating a system that helps foster the ability of parents to make the best choice for their child will improve children’s education.

A major hurdle for parents in making the best educational choice for their child is the financial burden. Therefore, a system that helps offset the financial burden of that educational choice will increase the choices available to parents.

Educational freedom is what allows school choice to flourish and thrive. A tax credit is a proven method to allow parents to have more money to spend on their children’s education with the lowest risk of government intrusion into educational free markets.

The national average cost per pupil is over fifteen thousand dollars. Therefore, a tax credit is not only fiscally viable, but also extremely beneficial to a state’s budget to incentivize high quality education outside the public school system.

Summary:

This model policy creates a tax credit program for parents whose children are educated outside of the public school system. The program functions similarly to that of the federal child tax credit, except that only qualifying children being educated in a non-public school are eligible. The model policy aims to create a streamlined, efficient, and cost-effective way for families to access more educational options for their students.

Model Legislation

Be it enacted…:

SECTION 1.  DEFINITIONS

  1. “Qualifying student” carries the definition of a “qualifying child” found in 26 U.S.C. § 152(c)(1) through (4) and who received full-time academic instruction in a non-public education setting, subject to the special circumstances outlined in section 2(C).
  2. “Non-public education setting” means any legal education setting in this state that meets the compulsory attendance requirements in [insert statutory reference], excluding the traditional public school system, charter schools, or any educational option paid for by the state of [insert state].
  3. “Full-time academic instruction” means attendance in a non-public education setting for at least one semester, or its equivalent (i.e., two quarters, one-and-one-half trimesters), during the taxable year for which a taxpayer is claiming a credit under section 2.
  4. “Non-public education tax credit” means the tax credit created in section 2.
  5. “Taxpayer” means an individual who is filing an income tax return pursuant to [insert statutory reference] or a married couple who is filing their tax return jointly pursuant to [insert statutory reference].
  6. “Noncustodial parent” means, in cases of divorce or separation, a parent with whom a child resides for less than fifty percent (50%) of the taxable year.

SECTION 2:

  1. For each qualifying student, a taxpayer shall be eligible for a credit against income taxes paid to the State in an amount equal to twenty-five percent (25%) [replace with alternate appropriate amount or percentage] of the average base educational aid provided by the State as defined in [insert statutory reference].
  2. No more than one taxpayer may claim the tax credit created by this section for a given qualifying student in a taxable year.
    1. In cases involving separation or divorce, where each parent resides in a different location, a noncustodial parent may claim the tax credit created in this section if:
      1. The child otherwise meets the definition of a qualifying student, except for the residency requirement specified in 26 U.S.C. § 152(c)(1)(B); and
        1. A court of competent jurisdiction has unconditionally awarded the noncustodial parent the tax benefits associated with the child pursuant to [insert statutory reference] and the noncustodial parent attaches a copy of such court order to their income tax return for the taxable year; or
        2. The custodial parent signs a written declaration that they will not claim the tax credit created in this section for such child for the applicable taxable year.
  3. The [insert State tax authority] may promulgate rules and regulations to carry out the provisions of this section. However, such rules and regulations shall not require evidence of a taxpayer’s compliance with the compulsory attendance requirements in [insert statutory reference] beyond the applicable evidentiary requirements otherwise found in state law for proving compliance with the compulsory attendance requirements in [insert statutory reference].

This act takes effect the tax year following approval by the Governor or otherwise becoming law.

Optional Variances

Note: Section 1 B. - If your state considers nonpublic education options as an exemption from the compulsory education laws then substitute the following:

Non-public education setting refers to any legal education setting in this state that meets legal exemption from compulsory attendance requirements in [insert statutory reference] excluding any educational option paid for by the state of [insert state] that also meets the legal exemption from compulsory attendance requirements.