Oklahoma Parental Choice Tax Credit Program Set For Changes In 2025-2026

The Oklahoma Tax Commission (OTC) is gearing up to roll out the parental choice tax credit for the 2025-2026 school year. The credits were created in 2023, giving Oklahoma families up to $7,500 for private school expenses. Priority is given to those families earning $150,000 or less annually.

According to the OTC, in the program’s first year, 36,000 applications were submitted, 16,800 “priority” applications, 11,000 “non-priority” and 5,600 were denied due to the program reaching capacity. The remainder of the applications could not be processed due to insufficient documentation or incomplete application submissions. The program had a $150 million limit and awarded $101 million to priority and $49 million to non-priority.

When the law was initially passed, there were some issues with the actual implementation of the tax credit program. Legislators passed a new law, House Bill 3388, which was signed into law during the 2024 legislative session.

“We want to make sure that the money that’s coming from state taxpayer dollars is being spent in the correct ways,” Rep. Jacob Rosecrants said earlier this year. “It basically says any private school that takes public dollars has to follow the same rules and regulations as your public schools.”

HB3388 amends several of the program’s original rules:

1. Beginning with the 2025-2026 school year, the Parental Choice Tax Credit program is aligned with the school year.
2. Applications for the 2025-2026 school year will open on February 18, 2025.
3. Priority applications MUST be submitted within the first 60 days to receive priority consideration.
4. Payments will be made in two installments – paid on or before August 30 and January 15.
5. The credit is now exempt from Oklahoma taxable income beginning in tax year 2024 and thereafter.
6. Participating schools MUST be physically located in Oklahoma.

Since this is a tiered system, the credits are capped at $200 million for 2025 and $250 million for 2026. The Oklahoma Tax Commission is no longer partnering with Merit for the administration of the Parental Choice Tax Credit program.

To apply, parents or legal guardians must request an enrollment verification form for each student from the school they plan to attend. The school will provide each student with a number that must be submitted on the taxpayer’s application. Then, you will need to go to OKTAP to submit the application and you will be notified about the status of the application. Parental Choice Tax Credit checks will be mailed directly to the participating private school where taxpayers will either pick up the check or sign the check over to the school.

For more information on applying, please contact the OTC directly. OTC also created a web page to help families navigate through the application process: https://oklahoma.gov/tax/individuals/parental-choice-tax-credit.html