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ENGROSSED HOUSE
BILL NO. 3388 By: McCall of the House
and
Treat of the Senate
An Act relating to schools; amending Section 2,
Chapter 278, O.S.L. 2023 (70 O.S. Supp. 2023,
Section 28-101), which relates to the Oklahoma
Parental Choice Tax Credit Act; modifying
definitions; establishing credit amount for private
schools serving certain student populations;
prohibiting offset of credit for certain liabilities;
modifying application of caps from a tax year to a
fiscal year; providing fo r carryover of certain
unused credits; exempting certain eligible taxpayers
from providing additional income verification;
modifying timing and procedures for application
process; requiring authorization of certain credits;
providing dates for installments ; modifying priority
of tax credit recipients in certain cases; directing
taxpayers to provide notice related to a change in
enrollment status; providing for reallocation of
certain credits; excluding credits from taxable
income; prohibiting issuance of Fo rm 1099s; and
declaring an emergency.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY Section 2, Chapter 278, O.S.L.
2023 (70 O.S. Supp. 2023, Section 28 -101), is amended to read as
follows:
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Section 28-101. A. As used in the Oklahoma Parental Choice Tax
Credit Act:
1. "Commission" means the Oklahoma Tax Commission;
2. "Curriculum" means a complete course of study for a
particular content area or grade level;
3. "Department" means the St ate Department of Education;
4. "Education service provider" means a person, business,
public school district, public charter school, magnet school, or
organization that provides educational goods and/or services to
eligible students;
5. "Eligible student" means a resident of this state who is
eligible to enroll in a public school in this state. Eligible
student shall include a student who is enrolled in and attends or is
expected to enroll in a private school accredited by the State Board
of Education or another accrediting association or a student who is
educated pursuant to the other means of education exception provided
for in subsection A of Section 10 -105 of Title 70 of the Oklahoma
Statutes this title;
6. "Qualified expense" for the purpose of claiming the credit
authorized by subparagraph a of paragraph 1 of subsection C of this
section means tuition and fees at a private school accredited by the
State Board of Education or another accrediting association;
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7. "Qualified expense" fo r the purpose of claiming the credit
authorized by subparagraph b of paragraph 1 of subsection C of this
section means the following expenditures:
a. tuition and fees for nonpublic online or in-person
learning programs,
b. academic tutoring services provid ed by an individual
or a private academic tutoring facility,
c. textbooks, curriculum, or other instructional
materials including, but not limited to, supplemental
materials or associated online instruction required by
an education service provider, and
d. fees for nationally standardized assessments
including, but not limited to, assessments used to
determine college admission and advanced placement
examinations as well as tuition and fees for tutoring
or preparatory courses for the assessments; and
8. "Taxpayer" means a biological or adoptive parent,
grandparent, aunt, uncle, legal guardian, custodian, or other person
with legal authority to act on behalf of an eligible student.
B. There is hereby created the Oklahoma Parental Choice Tax
Credit Program to provide an income tax credit to a taxpayer for
qualified expenses to support the education of eligible students in
this state.
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C. For the tax year 2024 and subsequent tax years, there shall
be allowed against the tax imposed by Section 2355 of Title 68 of
the Oklahoma Statutes a credit for any Oklahoma taxpayer who incurs
a qualified expense on behalf of an eligible student, to be
administered subject to the following amounts for each tax year:
1. If the eligible student attends a private school in
Oklahoma, accredited by the State Board of Education or another
accrediting association, the maximum credit amount shall be:
a. (1) Seven Thousand Five Hundred Dollars ($7,500.00)
or the amount of tuition and fees for the private
school, whichever is less, if the eligible
student is a member of a household in which the
total adjusted gross income during the second
preceding tax year does not exceed Seventy -five
Thousand Dollars ($75,000.00),
(2) Seven Thousand Dollars ($7,000.00) or the amount
of tuition and fees for the private school,
whichever is less, if the eligible student is a
member of a household in which the total adjusted
gross income during the second preceding tax year
is more than Seventy -five Thousand Dollars
($75,000.00) but does not exceed One H undred
Fifty Thousand Dollars ($150,000.00),
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(3) Six Thousand Five Hundred Dollars ($6,500.00) or
the amount of tuition and fees for the private
school, whichever is less, if the eligible
student is a member of a household in which the
total adjusted gross income during the second
preceding tax year is more than One Hundred Fifty
Thousand Dollars ($150,000.00) but does not
exceed Two Hundred Twenty -five Thousand Dollars
($225,000.00),
(4) Six Thousand Dollars ($6,000.00) or the amount of
tuition and fees for the private school,
whichever is less, if the eligible student is a
member of a household in which the total adjusted
gross income during the second preceding tax year
is more than Two Hundred Twenty -five Thousand
Dollars ($225,000.00) but does not excee d Two
Hundred Fifty Thousand Dollars ($250,000.00), or
(5) Five Thousand Dollars ($5,000.00) or the amount
of tuition and fees for the private school,
whichever is less, if the eligible student is a
member of a household in which the total adjusted
gross income during the second preceding tax year
is more than Two Hundred Fifty Thousand Dollars
($250,000.00), and
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b. One Thousand Dollars ($1,000.00) in qualified expenses
per eligible student in each tax year if the eligible
student is educated pursuant to th e other means of
education exception provided for in subsection A of
Section 10-105 of Title 70 of the Oklahoma Statutes
this title. To claim the credit, the taxpayer shall
submit to the Commission receipts for qualified
expenses as defined by paragraph 7 of subsection A of
this section;
2. If the eligible student attends a private school in
Oklahoma, accredited by the State Board of Education or another
accrediting association, that exclusively serves students
experiencing homelessness, the credit amount shall be Seven Thousand
Five Hundred Dollars ($7,500.00) or the amount of the cost to
educate the eligible student at the private school, whichever is
less;
3. If the eligible student attends a private school in
Oklahoma, accredited by the State Board of Education or another
accrediting association, that primarily serves financially
disadvantaged students, the credit amount shall be the maximum
credit amount authorized by subparagraph a of paragraph 1 of this
subsection or the amount of the cost to educat e the eligible student
at the private school, whichever is less. The cost to educate the
eligible student shall be equal to the average cost to educate all
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students attending the private school, which shall be calculated by
dividing the private school’s t otal expenditures in the previous
year by the total enrollment in the previous school year. A private
school shall be deemed to be primarily serving financially
disadvantaged students if the private school’s admissions are based
on enrolling students whos e gross family income is two hundred fifty
percent (250%) of the federal poverty threshold or below;
4. The taxpayer shall retain all receipts of qualified expenses
as proof of the amounts paid each tax year the credit is claimed and
shall submit them to the Commission upon request; and
3. 5. If the credit exceeds the tax imposed by Section 2355 of
Title 68 of the Oklahoma Statutes, the excess amount shall be
refunded to the taxpayer ; and
6. Credits claimed by a taxpayer pursuant to the provisions of
this section shall not be used to offset or pay the following:
a. delinquent tax liability,
b. accrued penalty or interest from the failure to file a
report or return,
c. accrued penalty or intere st from the failure to pay a
state tax within the statutory period allowed for its
payment,
d. liability of the taxpayer from any prior tax year, or
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e. any debt, unpaid fine, final judgement, or claim filed
with the Commission by a qualified entity as defi ned
in Section 205.2 of Title 68 of the Oklahoma Statutes .
D. 1. a. For tax fiscal year 2024, the total amount of credits
authorized by subparagraph a of paragraph 1 of
subsection C of this section shall not exceed One
Hundred Fifty Million Dollars ($150, 000,000.00). Any
unused credits from fiscal year 2024 shall be carried
over to fiscal year 2025.
b. For tax fiscal year 2025, the total amount of credits
authorized by subparagraph a of paragraph 1 of
subsection C of this section shall not exceed Two
Hundred Million Dollars ($200,000,000.00 ), except for
unused credits carried over from fiscal year 2024
pursuant to subparagraph a of this paragraph .
c. For tax fiscal year 2026, and subsequent tax fiscal
years, the total amount of credits authorized by
subparagraph a of paragraph 1 of subsection C of this
section shall not exceed Two H undred Fifty Million
Dollars ($250,000,000.00).
d. Credits authorized by subparagraph a of paragraph 1 of
subsection C of this section shall be applied to the
fiscal year in which the installment payment provided
in subsection E of this section is made.
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2. For tax fiscal year 2025, and subsequent tax fiscal years,
the total amount of credits authorized by subparagraph b of
paragraph 1 of subsection C of this section shall not exc eed Five
Million Dollars ($5,000,000.00).
E. 1. The Commission shall prescri be applications for the
purposes of claiming the credits authorized by the Oklahoma Parental
Choice Tax Credit Act and a deadline by which applications shall be
submitted. A taxpayer claiming the credit authorized by
subparagraph a of paragraph 1 of subse ction C of this section shall
submit an application prescribed by the Commission to receive the
credit. If an eligible taxpayer provides documentation on the
application that he or she is a recipient of income -based government
benefits including the Suppl emental Nutrition Assistance Program
(SNAP), Temporary Assistance for Needy Families (TANF), or
SoonerCare, the eligible taxpayer shall not be required to provide
additional income verification.
2. To ensure educational continuity for students, the
application process shall be administered based on the school year.
The first application aligned to the school year shall open on May
1, 2024, for the 2024 -2025 school year. Prior to authorizing any
credits for the 2024 -2025 school year to taxpayers who did not
receive an allocation of credits for the fall semester of 2024, the
Commission shall first automatically authorize the same amount of
credits to taxpayers who were authorize d credits prior to May 1,
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2024, for the fall semester of 2024. Beginning in t he 2025-2026
school year and subsequent years, the application period shall open
on January 15 prior to the beginning of each school year. For any
eligible student who is a memb er of a household in which the total
federal adjusted gross income does not ex ceed One Hundred Fifty
Thousand Dollars ($150,000.00), applications shall be submitted to
the Commission within the first sixty (60) days of the opening of
the application period to receive priority consideration. Any
taxpayer who receives an allocation o f tax credits shall also have
priority consideration in any subsequent period; provided, that an
application is submitted within the first sixty (60) days of the
application period. For students enrolled in the full school year,
the credit shall be paid in two installments, one per school
semester, to be paid no later than August 30 and January 15, each of
which shall be half of the total expected amount of tuition and fees
for the private school based on the affidavit enrollment
verification form submitted pursuant to this subsection, but in no
event shall an installment payment exceed half the amount of the
credit authorized by subparagraph a of paragraph 1 of subsection C
of this section.
3. For students enrolled in less than the full school year, the
credit shall be prorated by semester and issued no later than thirty
(30) days after the application is approved or during the first
thirty (30) days of the semester in which the student is enrolled,
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whichever is later. The prorated installment payment sha ll not be
less than fifty percent (50%) of the total expected amount of
tuition and fees for the private school based on the enrollment
verification form submitted pursuant to th is subsection, but in no
event shall an installment payment exceed the amount of the credit
authorized by subparagraph a of paragraph 1 of subsection C of this
section.
4. A taxpayer claiming the credit authorized by subparagraph a
of paragraph 1 of subse ction C of this section shall submit to the
Commission an affidavit enrollment verification form from the
private school in which the eligible student is enrolled or is
expected to enroll with the tuition and fees to be charged the
taxpayer for the applica ble school year. The Commission shall make
installment payments based on the expected tuition and fee amounts
provided on the enrollment verification form and submitted pursuant
to this subsection.
F. In reviewing the event there are more applications submitted
by eligible taxpayers to determine whether they qualify for a credit
authorized by subparagraph a of paragraph 1 of subsection C of this
section, than available credits pursuant to subsection D of this
section, then the Commission shall give first preference in making
installments authorizing credits to eligible students of taxpayers
who qualify pursuant to divisions (1) and (2) of subparagraph a of
paragraph 1 of subsection C of this section. The Commission shall
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make the installments based on the expected amount of tuition and
fee amounts on the affidavit submitted pursuan t to this subsection:
1. First, received the credit the prior year;
2. Second, qualify pursuant to divisions (1) and (2) of
subparagraph a of paragraph 1 of subsection C of thi s section; and
3. Third, are siblings of eligible students of taxpayers who
received the credit in the prior year .
F. G. Taxpayers claiming the credit shall:
1. Only claim the credit for qualified expenses as defined in
paragraphs 6 and 7 of subsection A of this section to provide an
education for an eligible student;
2. Ensure no other person is claiming a credit for the eligible
student;
3. Not claim the credit for an eligible student who enrolls as
a full-time student in a public school district, public charter
school, public virtual charter school, or magnet school; and
4. Comply with rules and requirements established by the
Commission for administration of the Oklahoma Parental Choice Tax
Credit Program; and
5. Notify the Commission no later than the thirtieth day after
the date on which the eligible student:
a. enrolls in a public school, including an open -
enrollment charter school,
b. enrolls in a nonaccredited private school,
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c. graduates from high school, or
d. is no longer utilizing credits authorized by
subparagraph a of paragraph 1 of subsection C of this
section for any reason.
G. H. Eligible students may accept a scholarship fro m the
Lindsey Nicole Henry Scholarships for Students with Disabilities
Program created by Section 13 -101.2 of Title 70 of the Oklahoma
Statutes this title while participating in the Oklahom a Parental
Choice Tax Credit Program.
H. 1. I. The Commission shall have:
1. Have the authority to conduct an audit or contract for the
auditing of receipts for qualified expenses submitted pursuant to
subparagraph b of paragraph 1 of subsection C of th is section.;
2. The Commission shall be Be authorized to recapture the
credits otherwise authorized by the provisions of this act on a
prorated by semester basis if an audit conducted pursuant to this
subsection shows that the credit was claimed for expen ditures that
were not qualified expenses or it finds that the taxpa yer has
claimed an eligible student who no longer attends a private school
or has enrolled in a public school in the state ; and
3. Reallocate credits within thirty (30) days of receipt of
notice from a taxpayer pursuant to paragraph 5 of subsection G of
this section to the next eligible taxpayer in line when a taxpayer,
on behalf of an eligible student in the program, chooses not to
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participate, is no longer eligible to participate, or choo ses to
forgo participation in the program for any reason .
I. J. In the event of a failure of revenue pursuant to the
Oklahoma State Finance Act, the tax credits otherwise authorized in
subsection C of this section shall be reduced proportionately to the
reduction in the amount of money appropriated to the State Board of
Education for the financial support of public schools for the fiscal
year in which the failure of revenue occurs.
J. K. The Commission shall make available on its website the
amount of credits claimed each tax year pursuant to subparagraphs a
and b of paragraph 1 of subsection C of this section.
L. Credits received pursuant to this act shall not constitute
taxable income to a taxpayer who received the credit on behalf of an
eligible student. The Commission shall not issue any Form 1099s to
taxpayers.
SECTION 2. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof this act shal l take effect and
be in full force from and after its passage and a pproval.
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Passed the House of Representatives the 13th day of March, 2024.
Presiding Officer of the House
of Representatives
Passed the Senate the ___ day of __________, 2024.
Presiding Officer of the Senate