Rhode Island – Tax Credits for Contributions to Scholarship Organizations
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.
Program Fast Facts
Program Details
Rhode Island’s Tax Credits for Contributions to Scholarship Organization Participation
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Rhode Island offers tax credits to businesses supporting scholarship-granting organizations (SGOs), nonprofits that provide private school scholarships.
Student Funding
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
Student Eligibility
Students must have family incomes at or below 250 percent of the poverty level ($64,375 for a family of four in 2019–20).
EdChoice Expert Feedback
Rhode Island’s tax-credit scholarship is severely limited by its extremely low $1.5 million cap for available funding, which can provide only a tiny fraction of the scholarships demanded. Only about one-third of potential donors have been able to participate in any given year. The program has several positive features as well. The 75 percent credit (if donating for one year or 90 percent if donating for two years) offers an attractive opportunity for corporations to continue supporting the program. SGOs have the flexibility to determine their own student funding amounts. Regulations on private schools are reasonable and unobtrusive. Schools must comply with health, safety and nondiscrimination laws, employ teachers with bachelor’s degrees and conduct teacher background checks. The program could serve more children if policymakers would increase the overall cap or add an escalator clause, similar to Florida’s or New Hampshire’s, to allow the program to grow to meet demand.
Rules and Regulations
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- 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
SGO Requirements:
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- 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
Governing Statutes
44 R.I. Gen. Laws §§ 62-1 through 62-7
Legal History
No legal challenges have been filed against the program.