AN ACT TO AUTHORIZE AN INCOME TAX CREDIT FOR ELIGIBLE EDUCATIONAL EXPENSES PAID BY A PARENT OR LEGAL GUARDIAN ON BEHALF OF A DEPENDENT K-12 STUDENT; TO SPECIFY A MAXIMUM AMOUNT OF THE CREDIT PER STUDENT; TO PROVIDE THAT ANY UNUSED PORTION OF THE CREDIT MAY BE CARRIED FORWARD FOR THE FIVE SUCCEEDING TAX YEARS; TO PROVIDE THAT THE AMOUNT OF THE CREDIT THAT MAY BE UTILIZED IN ANY TAX YEAR SHALL NOT EXCEED THE TOTAL STATE INCOME TAX LIABILITY OF THE TAXPAYER FOR THAT YEAR; TO PROVIDE THAT THE AGGREGATE AMOUNT OF TAX CREDITS THAT MAY BE AWARDED UNDER THIS SECTION IN ANY CALENDAR YEAR SHALL NOT EXCEED $20,000,000.00; TO PRESCRIBE THE CONTENT REQUIRED IN THE APPLICATION FOR THE CREDIT; TO PROVIDE THAT THE DEPARTMENT SHALL ESTABLISH A LOTTERY SYSTEM FOR SELECTING TAXPAYERS TO BE AWARDED THE CREDIT; TO AUTHORIZE THE DEPARTMENT OF REVENUE TO PROMULGATE REGULATIONS AS NEEDED TO ADMINISTER THIS ACT; TO SPECIFY THAT THIS ACT CREATES A PILOT PROGRAM AND THAT NO CREDITS SHALL BE AUTHORIZED UNDER THIS ACT FOR ELIGIBLE EXPENSES INCURRED IN ANY CALENDAR YEAR OTHER THAN 2026; AND FOR RELATED PURPOSES.
Impact
The legislation is expected to create a significant impact on state education policy by providing financial relief to families and encouraging educational spending. The tax credit is also projected to stimulate interest in private educational options among parents who might be struggling with the costs associated with K-12 education. However, as the bill is structured as a pilot program, tax credits will only be applicable for expenses incurred in the year 2026, making its long-term impact contingent upon evaluation after its initial implementation.
Summary
Senate Bill 3118 proposes the implementation of an income tax credit program aimed at assisting parents or legal guardians in covering specific educational expenses for dependent K-12 students. The bill defines eligible expenses to include tuition for accredited private schools, textbooks, school supplies, fees for school-sponsored activities, and driver’s education fees. A key feature of the bill is that it allows for a credit of up to $2,500 per student per tax year, with the stipulation that any unused portion of the credit can be carried forward for five years and is limited to the taxpayer's state income tax liability for that year. Additionally, the total aggregate tax credits awarded in any calendar year cannot exceed $20 million.
Contention
Notable points of contention surrounding SB3118 include the implications of instituting such a lottery-based tax credit system for educational funding. Critics may question the fairness of a lottery system that limits participation based on chance rather than need, raising concerns about accessibility for lower-income families. There may also be debates regarding the prioritization of public versus private education funding, with opponents possibly viewing the bill as a move towards subsidizing private schooling at the expense of public education systems.