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STATE OF OKLAHOMA
1st Session of the 60th Legislature (2025)
SENATE BILL 1016 By: Paxton
AS INTRODUCED
An Act relating to income tax credit; amending
Section 2, Chapter 278, O.S.L. 2023, as amended by
Section 3, Chapter 277, O.S.L. 2024 (7 0 O.S. Supp.
2024, Section 28-101), which relates to the Oklahoma
Parental Choice Tax Credit Act; modifying defi nition;
requiring the Department of Human Services and the
Oklahoma Health Care Authority to verify certain
claims by applicants upon request; r equiring
participating private schools to provide certain
information to the Ok lahoma Tax Commission; and
providing an effective date .
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY Sectio n 2, Chapter 278, O.S.L.
2023, as amended by Section 3, Chapter 277, O.S.L. 2024 (70 O.S.
Supp. 2024, Section 28 -101), is amended to read as follows:
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 State Department of Education;
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4. “Education service provider ” means a person, business,
public school distri ct, public charter school, magnet school, or
organization that provides educational goods and/or services to
eligible students in this state;
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 in this state accredited by
the State Board of Education or another accrediting association or a
student who is educated pursuant to the o ther means of education
exception provided for in subsection A of Section 10 -105 of this
title;
6. “Qualified expense” for the purpose of claiming the credit
authorized by paragraph 1 of subsection C of this section means
tuition and fees at a private sch ool in this state accredited by the
State Board of Education or another accredi ting association. Such
private school shall comply with the provisions of subsection M of
this section. Provided, the amount of tuition and fees considered a
qualified expense pursuant to this paragraph shall not include
tuition and fees paid with any scholarship or tuition and fees
discounted or otherwise reduced by the school;
7. “Qualified expense” for the purpose of claiming the credit
authorized by paragraph 2 of subsecti on C of this section means the
following expenditures:
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a. tuition and fees for nonpublic learning programs,
online or in person,
b. academic tutoring services provided by an individual
or a private academic tutoring facility,
c. textbooks, curriculum, or o ther 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 us ed to
determine college admission and advanced placement
examinations as well a s 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, c ustodian, 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 educatio n of eligible students in
this state.
C. For the tax year 2024 and subsequent tax years, and fiscal
year 2026 and subsequent fiscal 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
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expense on behalf of an eligible student, to be administered subject
to the following amounts:
1. If the eligible student attends a private school in this
state accredited by the State Board of Education or anothe r
accrediting association, the annual maximum credit amount for tax
year 2024, fiscal year 2026, and each subsequent fiscal year shall
be:
a. Seven Thousand Five Hundred Dollars ($7,500.00) or the
amount of tuition and fees for the private school,
whichever is less, if the combined adjusted gross
income of the parents or legal guardians of the
eligible student during the second preceding tax year
does not exceed Seventy -five Thousand Dollars
($75,000.00),
b. Seven Thousand Dollars ($7,000.00) or the amount of
tuition and fees for the private school, whichever is
less, if the combined adjusted gross income of the
parents or legal guardians of the eligible student
during the second preceding tax year is more than
Seventy-five Thousand Dollars ($75,000.00) but does
not exceed One Hundred Fifty Thousand Dollars
($150,000.00),
c. Six Thousand Five Hundred Dollars ($6,500.00) or the
amount of tuition and fees for the private school,
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whichever is less, if the combined adjusted gross
income of the parents or legal gu ardians of the
eligible student 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),
d. Six Thousand Dollars ($6,000.00) or the amount of
tuition and fees for the private school, whichever is
less, if the combined adjusted gross income of the
parents or legal guardians of the eligible student
during the second preceding tax year is more than Two
Hundred Twenty-five Thousand Dollars ($225 ,000.00) but
does not exceed Two Hundred Fifty Thousand Dollars
($250,000.00), or
e. Five Thousand Dollars ($5,000.00) or the amount of
tuition and fees for the private school, whichever is
less, if the combined adjusted gross income of the
parents or legal guardians of the eligible student
during the second preceding tax year is more than Two
Hundred Fifty Thousand Dollars ($250,000.00);
2. For tax year 2024 and subsequent tax years, the maximum
credit amount shall be One Thousand Dollars ($1,000.00) in q ualified
expenses per eligible student in each tax year if the eligible
student is educated pursuant to the other means of education
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exception provided for in subsection A of Section 10 -105 of 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;
3. If the eligible student attends a private school in this
state, accredited by the State Board of Education or another
accrediting association, tha t exclusively serves students
experiencing homelessness, the credit amount shal l 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;
4. If the eligible stud ent attends a private school in this
state, 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 paragrap h 1 of this subsection or the
amount of the cost to educate the eligible studen t at the private
school, whichever is less. The cost to educate the eligible student
shall be equal to the average cost to educate all students attending
the private school, wh ich shall be calculated by dividing the
private school’s total 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 ninety per cent (90%) of the private school ’s admissions
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are based on enrolling students w hose gross family income is two
hundred fifty percent (250%) of the federal poverty threshold or
below;
5. 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;
6. 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 taxpay er; and
7. 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 interest from the failure to pay a
state tax within the statutory period allowed for its
payment,
d. tax liability of the taxpayer from any prior tax year,
or
e. any debt, unpaid fine, final judgment, or claim filed
with the Commission by a qualified entity as defined
in Section 205.2 of Title 68 of the Oklahoma Statutes.
D. 1. a. For tax year 2024, the total amount of credits
authorized by paragraph 1 of subsection C of this
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section shall not exceed One Hundred Fifty Million
Dollars ($150,000,000.00) .
b. For the period of January 1, 2025, through June 30,
2025, the total amount of credits authorized by
paragraph 1 of subsection C of this section shall not
exceed One Hundred Million Dollars ($100,000,000.00).
The Commission shall not require a taxpaye r who
received a credit pursuant to paragraph 1 of
subsection C of this section in tax year 2024 to
reapply for a credit payable during the period
described in this subparagraph. The Commission shall
base the credit amount payable for the spring 2025 on
the fall 2024 installment disbursement payment amount.
c. For fiscal year 2026 and subsequent fiscal years, the
total amount of credits authorized by paragraph 1 of
subsection C of this section shall not exceed Two
Hundred Fifty Million Dollars ($250,000,00 0.00).
2. For tax year 2025 and subsequent tax years, the total amount
of credits authorized by paragraph 2 of subsection C of this section
shall not exceed Five Million Dollars ($5,000,000.00).
E. The Commission shall prescribe applications for the purp oses
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 paragraph 1
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of subsection C of this section shall submit an applic ation
prescribed by the Commission to receive the credit in two
installments, each of which shall be half of the expected amount of
tuition and fees for the private school based on the enrollment
verification form submitted pursuant to this subsection, but in no
event shall an installment payment exceed the amount of the credit
authorized by paragraph 1 of subsection C of this section. If an
eligible taxpayer provides documentation on the application that he
or she is a recipient of income -based government benefits including
the Supplemental Nutrition Assistance Program (SNAP), Tempo rary
Assistance for Needy Families (TANF), or SoonerCare, the eligible
taxpayer shall not be required to provide additional income
verification. The Department of Human Service s and the Oklahoma
Health Care Authority shall, upon request by the Oklahoma Tax
Commission, verify whether an applicant receives income -based
government benefits. The taxpayer shall provide authorization for
the Oklahoma Tax Commission to review confiden tial information
related to SNAP recipients under 7 C.F.R., Section 272.1(c)(3), for
purposes of verifying that the taxpayer is a current recipient of
SNAP benefits; provided, the information shall not be used for any
other purpose. A taxpayer claiming th e credit authorized by
paragraph 1 of subsection C of this section shall submit to the
Commission an enrollment verification form from the private school
in which the eligible student is enrolled or is expected to enroll
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with the tuition and fees to be cha rged the taxpayer for the
applicable school year. In reviewing applications su bmitted by
eligible taxpayers to determine whether they qualify for a credit
authorized by paragraph 1 of subsection C of this section, the
Commission shall give first preferenc e in making installments to
taxpayers who qualify pursuant to subparagraphs a and b of paragraph
1 of subsection C of this section. For credits issued in the 2025 -
2026 school year and subsequent school years, the application period
shall open on February 15 prior to the beginning of each school
year. For any eligible student whose parents or legal guardians
have a combined adjusted gross income that does not exceed 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.
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 on the enrollment
verification form submitted pursuant to this subsection.
F. In the event there are more applications submitted by
eligible taxpayers for a credit authorized by 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 authorizing credits for eligible students of taxpayers
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who qualify pursuant to subparagraphs a and b of paragraph 1 of
subsection C of this sec tion and have received the credit in the
prior year.
G. Taxpayers claiming the credit shall:
1. Only claim the credit for qualified expenses as defined in
paragraphs 6 and 7 o f 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 scho ol;
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 not later than thirty (30) days 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,
c. graduates from high school, or
d. is no longer utilizing credits authorized by paragraph
1 of subsection C of this section for any reas on.
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H. Eligible students may accept a scholarship from the Lindsey
Nicole Henry Scholarships for Students with Disabilities Program
created by Section 13 -101.2 of this title wh ile participating in the
Oklahoma Parental Choice Tax Credit Program.
I. 1. The Commission shall have the authority to conduct an
audit or contract for the auditing of receipts for qualified
expenses submitted pursuant to paragraph 2 of subsection C of t his
section.
2. The Commission shall be authorized to recapture the credits
otherwise authorized by the provisions of the Oklahoma Parental
Choice Tax Credit Act on a prorated basis if an audit conducted
pursuant to this subsection shows that the credit w as claimed for
expenditures that were not qualified expenses or it finds that the
taxpayer has claimed an eligible student who no longer attends a
private school or has enrolled in a public school in the state.
3. The Commission shall be authorized to rea llocate credits to
the next eligible taxpayer in line when a taxpayer, on behal f of an
eligible student in the program, chooses not to participate, is no
longer eligible to participate, or chooses to forgo participation in
the program for any reason.
4. The Commission shall provide notification of approval status
to applicants within thirty (30) days of closure of the application
window. Notice to applicants with an eligible student, whose
parents or legal guardians have a combined adjusted gross income o f
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more than One Hundred Fifty Thousand Dollars ($150,000.00), shall be
sent within thirty (30) days or no later than thirty (30) days after
the last day of the priority consideration period.
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 t he fiscal
year in which the failure of revenue occurs.
K. The Commission shall make available on its website to be
updated monthly:
1. The total amount of credits claimed each year pursuant to
paragraphs 1 through 4 of subsection C of this section;
2. The amount of credits claimed and number of students awarded
each fiscal year pursuant to paragraph 1 of subsection C of this
section disaggregated by income categories;
3. The total amount of credits claimed and number of students
awarded who attended a p ublic school in the semester immediately
preceding the school year for which th e application is made each
year; and
4. The total number of applications denied and total amount of
credits the denied applications represent for each fiscal year.
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L. Credits received pursuant to the Oklahoma Parental Choice
Tax Credit Act shall not constitute taxable income to a taxpayer who
received the credit on behalf of an eligible student.
M. No later than June 15 of each year, each participating
private school shall ele ctronically provide information to confirm
student enrollment and tuition infor mation for the fall and spring
semesters of the preceding school year and any other information
requested by the Oklahoma Tax Commission.
SECTION 2. This act shall become effective November 1, 2025.
60-1-1439 QD 1/16/2025 2:25:17 PM