Iowa

School Tuition Organization Tax Credit

  • Tax-Credit Scholarship
  • Enacted 2006
  • Launched 2006

Iowa offers tax credits to donors supporting school tuition organizations (STOs), nonprofits that provide private school scholarships to students in need. The program helps Iowa students from low- and middle-income households afford the schooling options that best fit their needs. Learn more about the program’s details on this page, including eligibility, funding, regulations and more.

We do not administer this program.

Eligibility Test Apply

  • 12,538

    Participating Students (2019–20)

  • 68%

    of Families with Children Income-eligible Statewide

  • 12

    Scholarship Organizations (2020–21)

  • 143

    Participating Schools (2020–21)

  • $1,403

    Average Scholarship Value (2019–20)

  • 10%

    Value as a Percentage of Public School Per-student Spending

Iowa’s School Tuition Organization Tax Credit Participation

Students Participating
School Year Ending
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Student Funding

STOs determine scholarship amounts, which are capped at a participating student’s tuition figure. A maximum of $20 million in tax-credit funding for scholarships will be available in 2022.

Student Eligibility

Children are eligible to receive scholarships if their family income does not exceed 400 percent of federal poverty guidelines ($106,000 for a family of four in 2021–22).

EdChoice Expert Feedback

Iowa’s tax-credit scholarship program helps more than ten thousand 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 400 percent of the federal poverty line ($104,800 for a family of four in 2020–21). About 51 percent of Iowa students are eligible for a scholarship though only 1.9 percent of students statewide actually use a scholarship. (Additionally, Iowa families are eligible for a very modest tax credit for tuition and textbooks.)

The average scholarship size is only about $1,400, which is only about 10 percent of the average expenditure per student at Iowa’s district schools. Tax credits are worth 75 percent of the value of the contributions to scholarship organizations. Only $20 million in tax credits are available annually, which is equivalent to just 0.6 percent of Iowa’s total K–12 revenue.

In order to expand access to educational choice, Iowa policymakers should dramatically increase the available tax credits, increase the credit value to 100 percent, and expand eligibility to all students (prioritizing scholarships based on need). 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.

Iowa’s scholarship program avoids unnecessary and counterproductive regulations.

Rules and Regulations

  • Income Limit: 400 percent x Poverty
  • Prior Year Public School Requirement: None
  • Geographic Limit: Statewide
  • Enrollment Cap: None
  • Scholarship Cap: Full Tuition
  • Testing Mandates: None
  • Credit Value: 65 percent
  • Per Donor Credit Cap: None
  • Budget Cap: $20 million

STO Requirements:

  • Use at least 90 percent of contributions for scholarships
  • Make scholarships available for more than one school
  • Annual review of financial statements by a public accounting firm
  • Submit data to the state on accepted contributions, grants awarded and participating schools

Governing Statutes

Iowa Stat. §422.11S

STATE GROUPS

School Tuition Organization Tax Credit State Groups

That Support School Choice

Iowa Alliance for Choice in Education (Iowa ACE) is the voice for school choice in the state of Iowa. They are a non-profit, non-partisan organization dedicated to expanding school choice options in Iowa for the benefit of Iowa’s children.

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