South Dakota
Partners in Education Tax Credit Program
- Tax-Credit Scholarship
- Enacted 2016
- Launched 2016
South Dakota’s Partners in Education Tax Credit Program provides tax credits to insurance companies who donate to nonprofit scholarship granting organizations (SGOs), which then provide private school scholarships to students who meet the income and grade requirements. Learn more about program funding, eligibility and rules on this page.
We do not administer this program.
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1,671
Students Participating (2022–23)
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51%
of Families with Children Income-eligible Statewide
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1
Scholarship Organization (2022–23)
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45
Schools Participating (2022–23)
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$1,972
Average Scholarship Value (2022–23)
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20%
Value as a Percentage of Public School Per-student Spending
South Dakota’s Partners in Education Tax Credit Program Participation
Student Funding
The average value of all scholarships awarded by an SGO may be worth up to 82.5 percent of the state’s share of the per-pupil allocation ($4,956 in 2020-21), although SGOs otherwise have discretion to determine scholarship amounts based on variables such as grade level and family income. Scholarships may be used for tuition and fees at qualifying schools.
(Last updated December 14, 2023)
Student Eligibility
Students are eligible if they live in families with incomes up to, but not exceeding, 150 percent of the federal free and reduced-price lunch (FRL) program ($83,250 for a family of four in 2023-24). Once a student has received a scholarship, that student remains eligible for three years; or if the student is entering high school, until high school graduation, regardless of income. After the initial period of income eligibility, scholarship students remain eligible if their family income in the prior year does not exceed 200 percent of the FRL program ($111,000 for a family of four in 2023-24). Starting in 2023, students in foster care are now eligible, regardless of income.
(Last updated December 14, 2023)
EdChoice Expert Feedback
South Dakota’s tax-credit scholarship program helps over a 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 277.5 percent of the federal poverty line ($83,250 for a family of four in 2023-24). About half of South Dakota students are eligible for a scholarship and less than one percent of students statewide actually use a scholarship.
The average scholarship size is about $1,729, which is only about 20 percent of the average expenditure per student at South Dakota’s district schools, though the cap on scholarship values is somewhat higher (82.5 percent of the state’s share of the per-pupil allocation, or about $5,000 in 2020-21). Tax credits are worth 100 percent of the value of the contributions to scholarship organizations, but only $3.5 million in tax credits are available annually, which is equivalent to less than one percent of South Dakota’s total K-12 revenue.
To expand access to educational choice, South Dakota 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.
South Dakota’s scholarship program generally avoids unnecessary and counterproductive regulations.
(Last updated December 14, 2023)
Rules and Regulations
- Income Limit: 150 percent x FRL
- Prior Semester Public School Requirement: None
- Geographic Limit: Statewide
- Enrollment Cap: None
- Scholarship Cap: 82.5% State Funding
- Testing Mandates: State test or Nationally norm-referenced tests, parent-directed
- Credit Value: 100%
- Per Donor Credit Cap: Tax liability excluding fire premium & workers’ compensation
- Total Tax Credit Cap: $3.5 million
SGO Requirements
- Use at least 90 percent of contributions for scholarships
- Use all revenue from interest or investments for scholarships
- Carry forward no more than 25 percent of its revenue from contributions from one fiscal year to another
- Ensure scholarships are portable during the school year and can be used at any qualified school that accepts the eligible student
- Verify annually that schools that accept scholarship students are accredited by the state department of education
- Provide a state approved receipt to companies for contributions made
- Notify the state of its intent to provide scholarships
- Provide to the state proof of 501(c)(3) status
- Conduct background checks on employees and board members
- Submit annually to the state:
- Data on contributing companies
- Data on accepted contributions
- Data on scholarships awarded and funded, including the amount awarded to students who qualify for the FRL program and the percentage of first-time scholarship recipients who were enrolled in a public school the previous year
- Financial audit performed by a certified public accountant
(Last updated December 14, 2023)
Legal History
No legal challenges have been filed against the program.
(Last updated December 14, 2023)