School Scholarship Tax Credit
- Tax-Credit Scholarship
- Enacted 2009
- Launched 2010
Indiana offers donors tax credits for contributing to Scholarship Granting Organizations (SGOs), nonprofits that distribute private school scholarships to students from low- and middle-income households. Learn more about the program’s details on this page, including eligibility, funding, regulations, legal history and more.
We do not administer this program.
Scholarships Awarded (2020-21)
of Families with Children Income-eligible Statewide
Scholarship Organizations (2020-21)
Schools Participating (2018–19)
Average Scholarship Value (2020-21)
Value as a Percentage of Public School Per-student Total Spending
Indiana’s School Scholarship Tax Credit Participation
Charitable donations made to scholarship-granting organizations fund the scholarships. Individuals and corporations may receive 50 percent tax credits for their donations to SGOs, and Indiana allocated $17.5 million for tax credits meant for SGO donations in 2021–22 and $18.5 million in 2022–23. SGOs determine scholarship amounts.
Children are eligible to receive scholarships if their family income does not exceed 300 percent of the guidelines needed to qualify for the federal free and reduced-price lunch program ($154,013 for a family of four in 2022-23). Children must be between ages five and 22 to participate. Current private school students can qualify.
EdChoice Expert Feedback
Indiana’s tax-credit scholarship program helps thousands of low- and middle-income students access schools that are the right fit for them, but policymakers could do more to expand educational opportunity.
Eligibility for the scholarships is limited to 300 percent of the federal poverty line (about $154,013 for a family of four in 2022-23). About 80 percent of Indiana students are eligible for a scholarship but less than 5 percent of students statewide actually participate in one of Indiana’s private educational choice options (including the Choice Scholarship Programand the Education Scholarship Account Program).
The average scholarship size is about $2,350, which is only 22 percent of the average expenditure per student at Indiana’s district schools. Tax credits are worth 50 percent of the value of the contributions to scholarship organizations. Only $17.5 million in tax credits are available annually, which is equivalent to only 0.2 percent of Indiana’s total K–12 spending.
In order to expand access to educational choice, Indiana policymakers should dramatically increase the available tax credits and expand eligibility to all students. The program could also be converted into an education savings account to ensure that all students have access to the education that’s the right fit for them, whether private school or a customized course of education.
Indiana’s tax-credit scholarship program generally avoids unnecessary and counterproductive regulations.
Rules and Regulations
- Income Limit: 300 percent x FRL
- Prior Year Public School Requirement: None
- Geographic Limit: Statewide
- Enrollment Cap: None
- Scholarship Cap: Full Tuition
- Testing Mandates: Nationally norm-referenced tests
- Credit Value: 50 percent
- Donation Cap: None
- Total Tax Credit Cap: $17.5 million (2021–22) and $18.5 million (2022–23)
- Use at least 90 percent of contributions for scholarships
- Be 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
No legal challenges have been filed against the program.