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STATE OF OKLAHOMA
1st Session of the 60th Legislature (2025)
COMMITTEE SUBSTITUTE
FOR
SENATE BILL 684 By: Paxton
COMMITTEE SUBSTITUTE
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 (70 O.S. Supp.
2024, Section 28-101), which relates to the Oklahoma
Parental Choice Tax Credit Act; defining term;
modifying definition; modifying tax years for which
certain annual credit limit is enforced; prescribing
procedure for enforcement of annual limit; increasing
the annual credit limitation by the amount of certain
unused credit; requiring the Department of Human
Services and the Oklahoma Health Care Authority to
verify certain claims by applicants upon request;
modifying application period for certain school
years; requiring the payment of full credit amount by
certain date; modifying preference for taxpayers who
received credit in prior years; stipulating that
authorization to reallocate credit is before certain
date; requiring participating private schools to
provide certain information to the Oklahoma Tax
Commission; updating statutory references; updating
statutory language; providing an effective date ; and
declaring an emergency .
BE IT ENACTED BY THE P EOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY Section 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:
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Section 28-101. A. As used in the Oklahoma Parental Choice Tax
Credit Act:
1. “Accrediting association ” means a legal entity, or that part
of a legal entity, that meets the accreditation requirements set by
the State Board of Education or another accrediting association
approved by the State Board of Education;
2. “Commission” means the Oklahoma Tax Commission;
2. 3. “Curriculum” means a complete course of study for a
particular content area or grade level;
3. 4. “Department” means the State Department of Education;
4. 5. “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 in this state;
5. 6. “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 Educat ion 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 this
title;
6. 7. “Qualified expense” for the purpose of claiming the
credit authorized by paragraph 1 of subsection C of this section
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means tuition and fees at a private school in this state accredited
by the State Board of Education or another accrediting 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 pa ragraph shall not
include tuition and fees paid with any scholarship or tuition and
fees discounted or otherwise reduced by the school;
7. 8. “Qualified expense” for the purpose of claiming the
credit authorized by paragraph 2 of subsection C of this section
means the following expenditures:
a. tuition and fees for nonpublic learning programs,
online or in person,
b. academic tutoring services provid ed by an individual
or a private academic tutoring facility,
c. textbooks, curriculum, or other instructiona l
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
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8. 9. “Taxpayer” means a biological or adoptive parent,
grandparent, aunt, uncle, legal guardian, custodian, or o ther 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.
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 taxp ayer who incurs a qualified
expense on behalf of an eligible student, to be administered subject
to the following amounts:
1. If the eligible student a ttends a private school in this
state accredited by the State Board of Education or another
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
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does not exceed Sevent y-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 s chool,
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 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
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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 p rivate 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 subs equent tax years, the maximum
credit amount shall be One Thousand Dollars ($1,000.00) in qualified
expenses per eligible student in each tax year if the eligible
student is educated pursuant to the other means of education
exception provided for in sub section 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
8 of subsection A of this section;
3. If the eligible student attends a private school in th is
state, 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;
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4. If the eligible student 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 paragraph 1 of this subsection or the
amount of the cost to educate the eligible student at the private
school, whichever is less. The cost to educate the eligible stu dent
shall be equal to the average cost to educate all students attending
the private school, which 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 sch ool
shall be deemed to be primarily serving financially disadvantaged
students if ninety percent (90%) of the private school ’s admissions
are based on enrolling students whose gross family income is two
hundred fifty percent (250%) of the federal pover ty threshold or
below;
5. The taxpayer shall retain all receipts of qualified expenses
as proof of the amou nts 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 taxpayer; and
7. Credits claimed by a taxpayer pursuant to the provisions of
this section shall not be used to offset or pay the following:
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a. delinquent tax liabili ty,
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. 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 s ubsection C of this
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 taxpayer 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
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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 ($250,000,000.00).
2. For tax year 2025 2026 and subsequent tax years, the total
amount of credits authorized by paragraph 2 of subsection C of this
section shall not exce ed Five Million Dollars ($5,000,000.00). The
Oklahoma Tax Commission shall annually calculate and publish a
percentage by which the credits authorized by this section shall be
reduced so the total amount of credits used to offset tax does not
exceed the annual limit. The formula to be used for the percentage
adjustment shall be Five Million Dollars ($5,000,000.00) divided by
the amount of credit claimed in the second preceding tax year. In
the event the total tax credits authorized by this section exceed
the annual limit in any tax year, the Tax Commission shall permit
any excess but shall factor such excess i nto the percentage
adjustment formula for subsequent tax years.
3. If a taxpayer, on behalf of an eligible student in the
program, chooses not to parti cipate, is no longer eligible to
participate, or chooses to forgo participation in the program for
any reason, the credit authorized by paragraph 1 of subsection C of
this section but not used and not reallocated pursuant to paragraph
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3 of subsection H of this section shall be added to the subsequent
fiscal year limitation as provided in paragraph 1 of this
subsection.
E. The Commission shall prescribe 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 paragraph 1
of subsection C of this section shall submit an application
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 a 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), Temporary
Assistance for Needy Families (TANF), or SoonerCare the Oklahoma
Medicaid Program commonly known a s SoonerCare, the eligible taxpayer
shall not be required to provide additional income verification.
The Department of Human Services 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
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to disclose application data to t he Department of Human Services
and/or the Oklahoma Health Care Authority, and for Department of
Human Services and/or the Oklahoma Health Care Authority to provide
confirmation of benefits to the Oklahoma Tax Commission for purposes
of verifying that the taxp ayer is a current recipient of SNAP, TANF ,
or Oklahoma Medicaid Program benefits; provided, the information
shall not be used for any other purpose. A taxpayer claiming the
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 e nrolled or is
expected to enroll with the tuition and fees to be charged the
taxpayer for the applicable school year. In reviewing applications
submitted 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 preference in making
installments payments to taxpayers who qualify pursuant to
subparagraphs a and b of paragraph 1 of subsection C of this
section. The Commission shall give second preference in making
payments to taxpayers who qualify and have received the credit in
the prior year. For credits issued in the 2025-2026 2026-2027
school year and subsequent school years, the application period
shall be open on February 15 March 15 through June 15 prior to the
beginning of each school year. For any eligible student whose
parents or legal guardians have a combined adjusted gross income
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that does not exceed One Hundred Fifty Thousand Dollars
($150,000.00) or qualified and received credit in the prior year,
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 full credit amount authorized for the school year 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 hal f 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
who qualify pursuant to subparagraphs a and b of paragraph 1 of
subsection C of this section 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 7 and 7 8 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;
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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 chart er school, or magnet school;
4. Comply with rules and requirements established by the
Commission for admini stration 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 e ligible 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 reason.
H. G. 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 while
participating in the Oklahoma Parental Choice Tax C redit Program.
I. H. 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 this
section.
2. The Commission shall be authori zed to recapture the credits
otherwise authorized by the provisions of the Oklahoma Parental
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Choice Tax Credit Act on a prorated basis if an audit conducted
pursuant to this subsection shows that the credit was 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 reallocate credits for
the current application year to the next eligible taxpayer in line
when a taxpayer, on behalf 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 no
later than September 1 following the opening of the application
period of each year.
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 of
more than One Hundred Fifty Thousa nd 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 perio d.
J. I. 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
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Education for the financial support of public schools for the fiscal
year in which the failu re of revenue occurs.
K. J. 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 public school in the semester i mmediately
preceding the school year for which the 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.
L. K. 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.
L. No later than June 15 of each year, each participating
private school shall electronically provide informa tion to confirm
student enrollment and tuition information for the fall and spring
semesters of the preceding school year and any other information
requested by the Oklahoma Tax Commission. Failure to provide this
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information may result in denial of private school participation in
subsequent school years.
SECTION 2. This act shall become effective July 1, 2025.
SECTION 3. It being immediately necessary for the preservation
of the public peace, health or safety, an emergenc y is hereby
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
60-1-1774 QD 3/3/2025 5:48:09 PM