Tax Credits for Contributions to Scholarship Organizations
- Tax-Credit Scholarship
- Enacted 2006
- Launched 2007
Rhode Island’s tax-credit scholarship program, enacted in 2006 and launched in 2007, offers a 75 percent tax credit to businesses that donate to scholarship-granting organizations (SGOs) or 90 percent if donated for two consecutive years and the second year’s donation is worth at least 80 percent of the first year’s donation. SGOs are non-profits that offer private school scholarships of varying amounts to students from low-income households. Learn more about this tax-credit scholarship program’s funding, eligibility, regulations, and governing statutes on this page.
We do not administer this program.
Students Participating (2020)
of Families with Children Income-eligible Statewide
Scholarship Organizations (2020)
Schools Participating (2020)
Average Scholarship Value (2020)
Value as a Percentage of Public School Per-student Spending
Rhode Island’s Tax Credits for Contributions to Scholarship Organizations Participation
Scholarships are funded by donations to scholarship-granting organizations. Businesses may receive tax credits for donations to SGOs. Those committing to donate for two consecutive years with the second year’s donation equal to or exceeding 80 percent of the first year’s donation may receive 90 percent credits. Otherwise, tax credits are worth 75 percent of donations to SGOs. Rhode Island allocates $1.5 million for tax credits meant for SGO donations. SGOs determine scholarship amounts.
Students must have family incomes at or below 250 percent of the poverty level ($65,500 for a family of four in 2020–21).
EdChoice Expert Feedback
Rhode Island’s tax-credit scholarship program helps hundreds of 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 250 percent of the federal poverty line. Only 35 percent of Rhode Island students are eligible for a scholarship and only 0.3 percent of students statewide actually use a scholarship.
The average scholarship size is about $2,500, which is only about 14 percent of the average expenditure per student at Rhode Island’s district schools. Tax credits are worth 75 percent of the value of the contributions to scholarship organizations (or 90% for two-year contribution commitments), and only $1.5 million in tax credits are available annually, which is equivalent to only 0.06 percent of Rhode Island’s total K–12 revenue.
In order to expand access to educational choice, Rhode Island policymakers should dramatically increase the available tax credits 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.
Rhode Island’s scholarship program generally avoids unnecessary and counterproductive regulations.
Rules and Regulations
- Income Limit: 250 percent x Poverty
- Prior Year Public School Requirement: None
- Geographic Limit: Statewide
- Enrollment Cap: None
- Scholarship Cap: None
- Testing Mandates: None
- Credit Value: 75 percent / 90 percent
- Credit Cap: $100,000
- Budget Cap: $1.5 million
- Use at least 90 percent of contributions for scholarships
- Provide annual report to the state detailing number and value of scholarships awarded, ZIP Codes of recipients and criteria used to award scholarships
No legal challenges have been filed against the program.
Tax Credits for Contributions to Scholarship Organizations State Groups
That Support School Choice
Rhode Island Families for School Choice seeks to empower families to choose the educational environment that best meets the strengths and needs for each student by advancing public policies and providing a voice for school choice.
The Rhode Island Scholarship Alliance (RISA) is the alliance of school choice advocates and scholarship-granting organizations that work to promote educational opportunities for economically disadvantaged students through the Rhode Island Scholarship Tax Credit Program.