In 2006 the Iowa legislature passed the Educational Opportunities Act, which created the School Tuition Organization (STO) Tax Credit Program. Here are the benefits for Iowa taxpayers:
- Donors to the program receive a 75% Iowa state income tax credit (Effective for tax year 2021, as revised by Iowa legislature)
- This is the largest state income tax credit available to individual taxpayers
- Eligible donors also include C-corporations, S-corporations, LLCs, partnerships and some trusts and estates.
- Non-cash donations such as stock or grain qualify for the tax credit
- Donors are issued a tax credit certificate by the School Tuition Organization that received the donation
- Tax credits are limited statewide, and each School Tuition Organization has an allotment of credits based on enrollment of member schools
- The statewide tax credit cap for 2022 is $20 million.
- Any credit in excess of the tax liability is not refundable but the excess for the tax year may be credited to the tax liability for the following five tax years or until depleted, whichever is the earlier
- Eligible donors may also claim Federal deductibility on the donation – individuals may claim 25% of the donation as a Federal charitable deduction, while corporations may claim the full 100% of the donation on the Federal return
What does the Iowa School Tuition Organization (STO) Program do?
- Provides tuition grants to children of low to lower-middle income families to attend an Iowa accredited, nonpublic school of their choice
- Over 12,000 students receive a tuition grant each school year
- List of Iowa School Tuition Organizations and Contact Information
- Full text of Iowa Code section 422.22S – last revised Nov. 2020 (does not include 2021 legislative changes)
- Iowa Department of Revenue Instructions on Non-Refundable Credits
- Iowa Department of Revenue – IA 148 Tax Credit Schedule Instructions
- IA 148 Tax Credit Schedule