Kentucky

Education Opportunity Account Program

  • Tax-Credit Education Savings Account
  • Enacted 2021
  • Launched 2023

Kentucky’s Educational Opportunity Account Program is an education savings account (ESA) that would allow eligible parents to use money donated to account-granting organizations (AGOs) to pay for private school tuition or other educational expenses, including tutoring, individual public school classes and extracurricular activities, instructional materials, technology, transportation, therapies and higher education courses. Individuals and businesses may receive tax credits for donations to AGOs, nonprofits that administer Education Opportunity Accounts (EOAs).  

The Kentucky program is inoperable as a direct result of Kentucky’s Supreme Court ruling that the program, as written, violates their state constitution. Provisions designed to limit the teaching and acceptance of religious beliefs that differed from Protestantism have since been declared a violation of a parent and child’s rights under the U.S. Constitution Bill of Rights, specifically the First Amendment guarantee of the right to freely exercise religious faith. Attorneys who believe that no provision in any state constitution should be interpreted to restrict, not advance, the education of all grade-school aged children are reviewing the ruling to determine next steps. 

We do not administer this program.

Eligibility Test State Groups

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  • 1st

    Kentucky’s First School Choice Program

  • 1st

    Nation’s First Tax Credit-Funded Education Savings Account

  • 49%

    of Families Income Eligible in Applicable Kentucky Counties

  • 40%

    Maximum Account Value as a Percentage of Public School Per-Student Spending

Percent of Kentucky students eligible for the Education Opportunity Account Program

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Student Funding

Students may use Education Opportunity Accounts (EOAs) for private school tuition fees or a variety of a la carte educational services, including public school classes and non-athletic extracurricular activities, instructional materials, technology, transportation, school uniforms, testing fees, summer and after-school programs therapies, and higher education courses.

For private school students, EOAs are worth the lesser of tuition and fees or financial need to attend the school as assessed by an independent organization approved by the Kentucky Department of Education.

For those intending to use EOAs for services other than private school tuition, funding is equal to the lesser of the cost of services or the previous year’s base per-pupil funding amount (about $4,700 in 2020–21) minus one-fourth of the percentage by which the family’s household income exceeds the federal threshold for free and-reduced-price lunch (FRL) ($97,125 for a family of four in 2023–24). For example, if a family of four had a household income of $60,000, they exceed the threshold for reduced price lunch by about 24 percent. A quarter of that percentage is about 6 percent, so the base EOA funding amount of about $4,700 would be reduced by 6 percent, or about $282, for a total of about $4,418. Parents may roll over unused EOA funds each quarter until a student graduates or turns 21.  

(Last updated June 29, 2023) 

Student Eligibility

Students must come from families earning no more than 175 percent of FRL ($97,125 for a family of four in 2023–24). Previous EOA recipients and siblings of EOA recipients are also eligible.

If a student’s family’s household income rises over 250 percent of the income threshold for the federal reduced-price lunch program ($138,750 for a family of four in 2023–24), that student is ineligible to receive further state deposits in their EOA. Only families residing in counties with populations over 90,000 may use EOA funds for nonpublic school tuition. Currently, these include Jefferson, Fayette, Kenton, Boone, Campbell, Hardin, Daviess and Warren counties.

(Last updated June 29, 2023) 

EdChoice Expert Feedback

Kentucky’s Education Opportunity Account Program is the country’s first tax credit-funded ESA and has the potential to help thousands of Kentuckians obtain the educational services that best fit their needs. However, policymakers could do more to expand educational opportunity.

Eligibility for the ESAs is limited to students from families earning up to 175 percent of the federal free-and-reduced-price lunch program (the equivalent of 323.75 percent of the federal poverty line), and only those currently living in the state’s eight largest counties may use EOAs for private school tuition. This limitation hampers potential growth of educational options in rural areas of Kentucky.

The value of each ESA is only about $4,600 at most and declines as income rises. That’s less than one-third of the average expenditure per student at Kentucky’s district schools.  Moreover, the program provides only $25 million in tax credits for donations to the account-granting organizations. At most, the program will be able to serve only about 5,000 students, or less than 1 percent of Kentucky’s K–12 student population.

To expand access to educational choice, Kentucky policymakers should increase the ESA amounts to be comparable with the per-pupil spending at district schools and expand eligibility to all students. The tax credits for the donations that fund the ESAs are also set to expire after 2026. The Kentucky legislature should work quickly to make the ESA policy permanent. Additionally, the program does not allow private school students to use funds to fully customize their education, and potentially funds them at a lesser amount than other students.

Kentucky’s ESA program generally avoids counterproductive regulations. Administration of the program is overseen by nonprofit account-granting organizations, which should give ESA families a voice to ensure that the program is run effectively.

(Last updated February 27, 2023) 

Rules and Regulations

  • Income Limit: 175 percent of the federal reduced price lunch income threshold ($97,125 for a family of four in 2023–24)
  • Prior Year Public School Requirement: None
  • Geographic Limit: Statewide (County for Private School Students)
  • Enrollment Cap: None
  • Account Deposit Cap: $4,700
  • Testing Mandates: None
  • Credit Value: 95 percent (97 percent for multi-year pledges)
  • Per Donor Credit Cap: $1 million
  • Total Tax Credit Cap: $25 million

AGO Requirements:

  • Must be certified by the state
  • Responsible for determining amount for which a student is eligible
  • Responsible for implementing a payment system for transactions from EOAs to providers
  • Use at least 90 percent of contributions for EOAs
  • Have an outside financial audit conducted and provide an annual report to the state

(Last updated June 28, 2023) 

Governing Statutes

Kentucky Revised Statutes 141.500 to 141.528.

(Last updated February 27, 2023)