TITLE 63

REVENUE AND TAXATION

CHAPTER 30

INCOME TAX

63-3029N.  IDAHO PARENTAL CHOICE TAX CREDIT. (1) There is hereby established the Idaho parental choice tax credit.

(2)  For the purpose of this section:

(a)  "Academic instruction" means kindergarten through grade 12 instruction that includes, at a minimum, English language arts, mathematics, science, and social studies.

(b)  "Eligible student" means:

(i)   A full-time resident of Idaho who is five (5) to eighteen (18) years of age; or

(ii)  A child with disabilities requiring ancillary personnel as defined in section 33-2001, Idaho Code, who is five (5) to twenty-one (21) years of age.

(c)  "Federal poverty level" means the federal poverty guidelines published and updated annually by the United States department of health and human services.

(d)  "Nonpublic school" means a private school, microschool, or learning pod that provides academic instruction to eligible students, which academic instruction may be provided in person, online, virtually, or through any combination thereof, and such academic instruction is:

(i)   Provided by an accredited school; or

(ii)  Documented in a portfolio of evidence or learning record that indicates the student’s growth. Records of the instruction shall be retained sufficient to establish that the instruction meets the requirements of paragraph (a) of this subsection and shall be available in the case of any audit by the state tax commission.

(e)  "Parent" means an eligible student’s parent, legal guardian, or foster parent, if such foster parent is licensed and in good standing pursuant to chapter 12, title 39, Idaho Code.

(f)  "Qualified expenses" means kindergarten through grade 12 tuition or fees for attending a nonpublic school, tutoring, nationally standardized assessments, assessments used to determine college admission, advance placement examinations, industry-recognized certification exams, and preparatory courses for nationally standardized assessments. "Qualified expenses" also means costs for textbooks, curricula used for kindergarten through grade 12 academic instruction, and transportation costs to and from a facility incurred for the purposes of receiving kindergarten through grade 12 academic instruction, including public transportation, ridesharing, and the use of privately owned vehicles, for which reimbursement shall use the mileage rate applicable to state employee travel in effect at the time the travel occurs. "Qualified expenses" shall not include expenses paid with funds received from a grant under section 33-1031, Idaho Code, or reimbursement pursuant to section 33-4603, Idaho Code.

(3)  The Idaho parental choice tax credit shall be administered as provided in this section. For tax year 2025 and subsequent tax years, there shall be allowed a refundable tax credit up to five thousand dollars ($5,000) per eligible student against the tax imposed by this chapter for any parent:

(a)  Who incurs qualified expenses of up to five thousand dollars ($5,000) per eligible student during the tax year, if each eligible student is a dependent and is properly claimed on the parent’s full-time Idaho resident individual income tax return; and

(b)  Who timely and properly files an application.

(4)  The state tax commission shall prescribe forms for the purpose of applying for and claiming the credit authorized by this section. The forms shall identify the civil and criminal penalties provided in sections 63-3046 and 63-3075, Idaho Code, for providing false and fraudulent tax information and shall require the parents to affirm under oath that the information submitted in the form is true and accurate. The forms shall also require any parent who has previously received a credit authorized by this section to certify and attach evidence that the parent completed the satisfaction and engagement survey required under subsection (14) of this section. Beginning in January 2026, and each year thereafter, the application period shall open on January 15 and shall remain open for a period of sixty (60) days. The state tax commission shall notify parents whether they will receive a credit award. Such notification must be within thirty (30) days of the close of the application period.

(5)  The state tax commission shall calculate the total amount of credits claimed in completed applications that qualify under subsection (3) of this section. If the total amount does not exceed the annual maximum limit provided in subsection (12) of this section, the state tax commission shall re-open the application period to receive new applications. Such applications shall be accepted until August 15 or until the annual maximum limit is reached, whichever is first.

(6)  Credits shall be issued on a yearly basis. For applications received in 2026, the state tax commission shall give priority to parents whose modified adjusted gross income as indicated on their most recently filed tax return does not exceed three hundred percent (300%) of the federal poverty level. Starting in the 2027 application period, the state tax commission shall give priority status to applications from parents who received a credit in the prior year, followed by parents whose taxable income as indicated on their most recently filed tax return does not exceed three hundred percent (300%) of the federal poverty level.

(7)  The refundable tax credit limit under subsection (3) of this section shall be increased to seven thousand five hundred dollars ($7,500) for each eligible student up to twenty-one (21) years of age who is also considered a child with disabilities requiring ancillary personnel as defined in section 33-2001, Idaho Code. Parents claiming an increased credit under this subsection shall document the student’s diagnosis or other determination made by an Idaho licensed health care provider or the student’s eligibility for services under an individualized education program in accordance with the federal individuals with disabilities education act.

(8)  The refundable tax credit provided in this section, including the advance payment, shall not constitute Idaho taxable income.

(9)  The application forms pursuant to subsection (4) of this section shall permit parents to elect a onetime advance payment of the credit for each eligible student. When a parent elects to receive an advance payment pursuant to this subsection, the credit shall be issued in one (1) installment, to be paid within sixty (60) days of notifying a parent of such credit award but not later than August 30. The state tax commission shall approve advance payments only for eligible students whose parents’ modified adjusted gross income as indicated on their most recently filed tax return does not exceed three hundred percent (300%) of the federal poverty level. Advance payments made under this subsection may be spent only on qualified expenses for which the parent may claim a credit under the provisions of this section. In order to enable parents whose modified adjusted gross income does not exceed three hundred percent (300%) of the federal poverty level to pay for a student’s education, an advance payment that is expended on qualified expenses for an eligible student may be claimed for such expenditure in that year and a parental choice tax credit shall be allowed on a parent’s tax return for that year, subject to the remaining requirements of this chapter.

(10) Parents claiming the Idaho parental choice tax credit shall:

(a)  Claim the credit for only qualified expenses incurred on behalf of an eligible student;

(b)  Not claim the credit for any semester in which a student was enrolled full-time or part-time in a public school, public charter school, public virtual charter school, public magnet school, or part-time public kindergarten.

(c)  Not claim the credit for any tuition or fees related to academic instruction provided by the parent to such parent’s eligible student;

(d)  Ensure no other parent claims a credit for an eligible student. In the event more than one (1) parent claims a credit under this section for the same eligible student in the same year, the provisions of section 63-3029L(2), Idaho Code, shall be used to determine which parent is entitled to receive the credit; and

(e)  Fill out and submit the satisfaction and engagement survey provided for in subsection (14) of this section. No parent shall be eligible to receive a credit under the provisions of this section in a subsequent year if such parent has not submitted such survey for the last year that such parent received the credit.

(11) If the credit exceeds the tax imposed by this chapter, the excess credit amount shall be refunded to the taxpayer. The state tax commission shall design the tax return forms to account for advance payment of the credit when calculating the tax imposed by this chapter.

(12) The total amount of tax credits authorized for all taxpayers under this section shall not exceed fifty million dollars ($50,000,000) each tax year. In the event the total amount of claims for tax credits allowed by this section exceeds fifty million dollars ($50,000,000), the credits shall be allowed in full to parents whose applications were properly and timely filed and who have priority status under subsection (6) of this section, followed by the remaining parents who filed complete applications on a first-come, first-served basis, until the annual maximum limit is reached. The state tax commission shall create and maintain a waiting list demonstrating who would be eligible on a first-come, first-served basis if the annual maximum limit for credits allowed under this section is increased.

(13)(a)  Beginning with the first regular session of the sixty-ninth Idaho legislature in 2027, the state tax commission shall provide an annual report to the governor, the senate local government and taxation committee, the house revenue and taxation committee, and the joint finance-appropriations committee that shall include:

(i)   The total amount of tax credits provided each year under this section;

(ii)  The number of parents who applied each year for the Idaho parental choice tax credit;

(iii) The amount of the average tax credit allowed;

(iv)  The number of credits distributed to parents with an adjusted gross income below three hundred percent (300%) of the federal poverty level;

(v)   The number of parents who applied each year for the advance payment pursuant to subsection (9) of this section, the number of advance payments awarded, and the median amount of the advance payments awarded;

(vi)  The geographic area of parents applying for the credit;

(vii) The number of eligible students on the waiting list for each year; and

(viii) A list of the categories of qualified expenses for which recipients used the tax credit, which shall include the dollar amounts for each category listed in subsection (2)(f) of this section.

(b)  The report shall not include any personally identifying information of eligible students, their parents, or their households.

(14) Beginning in 2026, and each year thereafter, the legislative services office shall deliver to each parent who has received a tax credit under the provisions of this section a parent satisfaction and engagement survey to evaluate the performance of the nonpublic school that the eligible student attended. The survey shall include but not be limited to the quality of school leadership, school safety, student engagement, quality of academic instruction, and quality of learning outcomes. The state tax commission shall provide the legislative services office with contact information to identify each parent receiving a credit and any other information required for the legislative services office to properly deliver the surveys required under this subsection, and shall deliver the surveys to the parents no later than January 15 each year. Each parent shall complete the survey and submit the completed survey to the legislative services office no later than March 15. Beginning in 2027, the legislative services office shall submit a report to the governor, the senate local government and taxation committee, the house revenue and taxation committee, and the joint finance-appropriations committee that shall include a summary of the survey results.

(15) Any taxpayer receiving an advance payment or claiming a tax credit without submission of a timely and properly prescribed form shall be ineligible to receive such payment or claim such credit. The state tax commission shall deny or recapture credits claimed by a parent for expenditures not authorized by the provisions of this section. If a parent has received an advance payment for an eligible student in a previous year, the parent shall not claim the credit for qualified expenses incurred in a year that a student ceases to qualify as an eligible student, except for any portion of the credit that exceeds the amount of the advance payment received. If a student ceases to qualify as an eligible student and the parent has already received the credit for that year, an amount of the credit, not exceeding the amount of the advance payment received, shall be repaid to or recovered by the state tax commission and deposited into the general fund.

(16) Parents who claim the credit on a tax return without receiving prior approval of an application may not receive a credit, and the state shall have no liability to such parent.

(17) The state tax commission shall, in as close to real time as practicable, make available on its website the annual maximum limit, the cumulative amount of credits claimed in applications under this section, and the cumulative amount of advance payments issued under this section until the annual maximum limit is reached.

(18) The state tax commission shall also keep records of the total applications for credits and total claim of credits that exceed the annual maximum limit.

(19) The state tax commission shall ensure that parents of eligible students receive notice in the application that participation in the program is a parental placement under 20 U.S.C. 1412 of the federal individuals with disabilities education act, along with an explanation of the rights that parentally placed students possess under the federal individuals with disabilities education act, including eligibility for equitable services, and any applicable state laws and regulations.

(20) The provisions of this section shall not be construed to permit any government agency to exercise control or supervision over any nonpublic school or to give the state authority to regulate the education of nonpublic school students. A nonpublic school that enrolls a student whose parent directs a refundable tax credit to the school pursuant to this section is not an agent of the state or federal government. A nonpublic school shall not be required to alter its creed, practices, admissions policy, or curriculum in order to accept students whose payment of tuition or fees stems from a refundable tax credit under this section.

History:

[63-3029N, added 2025, ch. 9, sec. 2, p. 29.]