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Indiana – School Scholarship Tax Credit


Indiana – School Scholarship Tax Credit

Indiana’s tax-credit scholarship program was enacted in 2009 and launched in 2010 to help low- and middle-income families access the right school for their children’s needs. Learn more about the program’s details on this page, including eligibility, funding, regulations, legal history, and more.

Program Fast Facts

  • 9,127 scholarships awarded (2014–15)

  • 52 percent of families with children income-eligible statewide

  • 5 scholarship organizations awarding scholarships (2014–15)

  • 318 schools participating (2014–15)

  • Average tax credit value: $1,361 (2014–15)

  • Value as a percentage of public school per-student spending: 14 percent

Program Details

Indiana’s School Scholarship Tax Credit Participation

Students Participating
School Year Ending

Click the + symbols to learn more about this program’s details.

Indiana offers donors tax credits for contributing to Scholarship Granting Organizations (SGOs), nonprofits that distribute private school scholarships.

Student Funding

Scholarship amounts are determined by SGOs.

There is no limit on the dollar amount of the tax credit that can be claimed by individuals or businesses, although the total amount of tax credits awarded statewide is limited to $8.5 million. This limit increases to $9.5 million in 2016–17.

Student Eligibility

Children are eligible to receive scholarships if their family income does not exceed 200 percent of the guidelines needed to qualify for the free and reduced-price lunch program ($89,726 for a family of four in 2015–16). Children must be between ages five and 22 to participate. Current private school students can qualify. Also, qualifying students must have been (1) enrolled in kindergarten, (2) a scholarship recipient in the previous school year from a nonprofit organization that qualifies for certification as an SGO, or (3) a scholarship recipient in the previous school year under this program.

Friedman Feedback

The eligibility restrictions on Indiana’s tax-credit scholarship program adversely affect the ability of middle- and upper-income families to use choice in education. That income limit should be increased. Additionally, the total cap on credits is just $8.5 million, which restricts the overall amount of money following students. A valuable update makes current private school parents eligible for the scholarship regardless of whether they previously attended a public school. That helps families who have sacrificed to give their child a better education but were not previously enrolled in the public schools. With that increase, however, Indiana will need to raise the cap on available tax credits to compensate for the additional demand.

Rules and Regulations

  • Income Limit: 200 percent x FRL
  • Prior Year Public School Requirement: None
  • Geographic Limit: Statewide
  • Enrollment Cap: None
  • Scholarship Cap: Full Tuition
  • Testing Mandates: National
  • Credit Value: 50 percent
  • Total Credit Cap: None
  • Budget Cap: $8.5 million


SGO Requirements:

  • Use at least 90 percent of contributions for scholarships
  • Certified by the state
  • Make scholarships available for more than one school
  • Conduct criminal background checks on all SGO employees and board members
  • Have an outside financial audit conducted and provide an annual report to the state

Governing Statutes

Ind. Code §§ 6-3.1-30.5 and 20-51-1 through 3

Legal History

No legal challenges have been filed against the program.

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