Indiana Code 6-3.1-30.5 and Indiana Code 20-51 create a School Scholarship and School Scholarship Tax Credit Program. Funding for scholarships will come from private, charitable donations to qualified scholarship granting organizations (SGOs). Donors (individuals or corporations) will be eligible to take advantage of a 50% credit against their state tax liability for contributions made to an SGO. While there are no limits on the size of qualifying contribution to an SGO, the entire tax credit program has a limit of $7.5 million in credits per state fiscal. This permits up to $15 million in donations and scholarships.
A scholarship granting organization is eligible for certification from the Indiana Department of Education if it is exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code and is organized at least in part to grant school scholarships. An SGO cannot limit the scholarships it provides under the program to children attending a particular school. SGOs will be required to meet organizational and financial reporting requirements.
Parents will apply for scholarships from a certified SGO, which may establish certain requirements for the scholarships they provide. A student is eligible to apply for the program if the student is a member of a household with an annual income of not more than two hundred percent (200%) of the amount required to qualify for the federal free or reduced price lunch program.
A participating school is a public or nonpublic school to which an eligible student is required to pay tuition or transfer tuition to attend and which voluntarily agrees to enroll the student. Participating schools must be accredited by the Indiana State Board of Education or a state, national or regional accreditation organization and must administer the ISTEP+ or another nationally-recognized norm-referenced test. The official lists of accreditation agencies and nationally-recognized tests are provided below.
Both the Indiana Department of Revenue and Indiana Department of Education have adopted rules to implement the program. The Indiana Department of Education has created an application and agreement for certification as a scholarship granting organization.
An organization that seeks certification as an SGO must submit the application and agreement as well as documents that establish eligibility under applicable statutes and rules. The documents must include:
- Proof of 501(c)(3) status.
- Proof, through articles of incorporation or other documents, that the organization is organized at least in part to grant school scholarships.
- Program policies.
- Program procedures.
- Promotional or descriptive materials about the program, including eligibility criteria and application forms.
The application and supporting documentation are submitted to:
Attn: Choice Scholarships
Indiana Department of Education
South Tower, Suite 600
115 W. Washington Street
Indianapolis, IN 46204
- Application to Become an SGO - updated 03/05/2015
- Approved Participating SGOs July-2015
- Department of Revenue School Scholarship
- Department of Revenue Rule
- Donor FAQ - updated 05/27/2014
- List of Approved Accrediting Agencies
- Parent FAQ- updated 05/27/2014
- Permanent Rule
- School Scholarship Tax Credit Program Report - updated 08/12/2015
- SGO Participating Schools 2015 - updated 09/15/2015