The South Carolina Refundable Educational Credit for Exceptional Needs Children is a refundable tax credit program passed and launched in 2015. Different from traditional tax credit programs, refundable tax credits have greater utility for parents of more modest incomes. Learn more about the program, including eligibility, funding, regulations, legal history and more.
South Carolina provides a refundable tax credit to parents or guardians of students with special needs. If the state taxes owed by the parents are less than the total credit allowed, they may receive a refund equal to the balance of the unused credit.
Parents or guardians receive a tax credit worth the lesser of (1) $11,000 per student or (2) their children’s actual cost of attending school. However, if the student receives a tax-credit scholarship from an approved scholarship-funding organization, then the credit claimed may equal only the difference of $11,000 or the cost of tuition, whichever is lower, and the amount of the tax-credit scholarship. The total cap on the program is $2 million (although there may be some flexibility based on participation in the Educational Credit for Exceptional Needs Children program; total cumulative cap for both programs is $12 million). The program reached the $2 million cap in tax year 2017, the last year of publicly available data.
Parents are eligible if their child has been designated by the South Carolina Department of Education as meeting the federal definition of a “child with a disability” (34 CFR 300.8). Additionally, a student’s parents must believe the assigned public school district does not sufficiently meet the student’s needs. Students who have been diagnosed within the last three years by a licensed speech-language pathologist, psychiatrist or medical, mental health, psycho-educational or other comparable licensed healthcare provider as having a neurodevelopmental disorder; a substantial sensory or physical impairment (such as deaf, blind, or orthopedic disability) or some other disability or acute or chronic condition that significantly impedes the student’s ability to learn and succeed in school without specialized instructional and associated supports and services tailored to the child’s unique needs are also eligible. Students must attend an eligible independent school.
This refundable tax credit directly empowers parents to choose an appropriate education for their child, knowing in advance how much money the state will reimburse them for their approved educational expenditures. This type of program is relatively easy for parents to navigate and understand. Two areas of improvement are suggested: 1) to pass enabling language, if necessary, for lending institutions to offer tax refund anticipation loans so that parents who are unable to pay tuition up front may nonetheless access funds to participate in this program and 2) to expand this refundable tax credit so that every child in the state may benefit.
No legal challenges have been filed against the program.