How much is the Kansas tax credit for contributions to a scholarship granting organization?

Plain-English summary

Kansas Notice 23-03 explains changes to the Tax Credit for Low Income Students Scholarship Program, made by 2023 House Substitute for Senate Bill 113. The bill changed both the size of the credit and two key definitions.

Bigger credit (Section 13, K.S.A. 72-4357). For tax years beginning after December 31, 2022, the credit equals 75% of the taxpayer's contribution to a scholarship granting organization authorized under K.S.A. 72-4351 et seq. The credit is available to taxpayers who pay Kansas income, corporate income, privilege, or premium tax.

New "eligible student" definition (Section 12, K.S.A. 72-4352(d)). An eligible student is a child who resides in Kansas and:

• has an annual family income at or below 250% of the federal poverty guidelines (as determined annually under 42 U.S.C. 9902(2)) -- this replaces the prior "eligible for free or reduced-price meals" test -- and meets the enrollment conditions (was enrolled in a Kansas public school in kindergarten through grade eight the previous year, or is eligible to enroll and is age seven or under); or
• has already received a scholarship under the program and has not graduated from high school or reached age 21.

New "qualified school" definition (Section 12, K.S.A. 72-4352(h)). A qualified school is any nonpublic school that provides elementary or secondary education, is accredited by the state board or a recognized accrediting agency (or is working in good faith toward accreditation), has notified the state board of its intent to participate, and complies with program requirements.

What this means for you

Donors to scholarship granting organizations

• Contributions made in tax years beginning after December 31, 2022 earn a Kansas credit worth 75% of the contribution (up from the prior amount).
• Individuals, corporations, banks (privilege tax), and insurers (premium tax) can all use the credit against their respective Kansas tax.

Families and schools

• More children may now qualify, because eligibility is based on family income at or below 250% of the federal poverty guidelines rather than the free/reduced-meals standard.
• Nonpublic schools that are accredited (or working toward it), have notified the state board, and comply with the program can be qualified schools.

Common questions

How large is the credit? 75% of a contribution to an authorized scholarship granting organization, for tax years beginning after December 31, 2022.

Which taxpayers can claim it? Those paying Kansas income, corporate income, privilege, or premium tax.

Who is an "eligible student" now? A Kansas child with family income at or below 250% of the federal poverty guidelines meeting the enrollment conditions, or a prior scholarship recipient who has not graduated or turned 21.

What is a "qualified school"? A nonpublic elementary or secondary school that is accredited (or working toward it), has notified the state board, and complies with the program.

Citations and references

• House Substitute for Senate Bill 113 (2023), Sections 12-13 -- changed the definitions and increased the credit.
• K.S.A. 72-4352 -- definitions of "eligible student" and "qualified school."
• K.S.A. 72-4357 -- amount of the credit, raised to 75% for tax years after December 31, 2022.
• K.S.A. 72-4351 -- the Tax Credit for Low Income Students Scholarship Program Act.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 23-03

Original ruling text

Policy and Research
109 SW 9th Street Phone: 785-368-8222
PO Box 3506 Fax: 785-296-1279
Topeka KS 66601-3506 www.ksrevenue.gov
Mark A. Burghart, Secretary Laura Kelly, Governor

                                        NOTICE 23-03

        TAX CREDIT FOR LOW-INCOME STUDENTS SCHOLARSHIP CONTRIBUTIONS

                                       (JULY 17, 2023)

   During the 2023 Legislative Session House Substitute for Senate Bill 113 was passed and

signed into law. Section 12 of the Bill amended K.S.A. 2022 Supp. 72-4352 to change the
definitions of "eligible student" and "qualified school" for purposes of the tax credit for low-
income students scholarship program act. In addition, Section 13 of the Bill amended K.S.A. 72-
4357 to change the amount of the tax credit that is allowed for a contribution to a scholarship
granting organization.

   Specifically, Section 12 of the Bill amended K.S.A. 2022 Supp. 72-4352(d) to change the

definition of "eligible student" as follows:

        (d) "Eligible student" means a child who:
        (1) Resides in Kansas; and
        (2) (A) (i) Is eligible for free or reduced-price meals under the national school
   lunch act Has an annual family income that is less than or equal to 250% of the federal
   poverty guidelines as determined annually in the federal register by the United States
   department of health and human services under 42 U.S.C. § 9902(2); and
        (ii) (a) was enrolled in kindergarten or any of the grades one through eight in any
   public school in the previous school year in which an educational scholarship is first
   sought for the child; or
        (b) is eligible to be enrolled in any public school in the school year in which an
   educational scholarship is first sought for the child and the child is seven years of age
   or under; or
        (B) has received an educational scholarship under the program and has not
   graduated from high school or reached the age of 21 years.

   In addition, Section 12 of the Bill amended K.S.A. 2022 Supp. 72-4352(h) to change the

definition of "qualified school" as follows:

         (h) "Qualified school" means any nonpublic school that:
         (1) Provides education to elementary or secondary students;
         (2) is accredited by the state board or a national or regional accrediting agency
   that is recognized by the state board for the purpose of satisfying the teaching
   performance assessment for professional licensure or is working in good faith toward
   such accreditation;
         (3) has notified the state board of its intention to participate in the
   program; and
         (4) complies with the requirements of the program.

  Section 13 of the Bill amended K.S.A. 2022 Supp. 72-4357 to allow, for tax years

commencing after December 31, 2022, a credit in the increased amount of 75% of the taxpayer's
contribution to a scholarship granting organization authorized pursuant to K.S.A. 72-4351 et seq.
and amendments thereto. The credit is available to taxpayer's who pay Kansas income, corporate
income, privilege, or premium tax.

                                TAXPAYER ASSISTANCE

 Additional copies of this notice, forms or publications are available from our web site,

www.ksrevenue.gov. If you have questions about this Notice, please contact:

                             Taxpayer Assistance Center
                            Kansas Department of Revenue
                            Scott Office Building, 1st Floor
                                   120 SE 10th Ave
                                    P. O. Box 3506
                               Topeka, KS 66601-3506
                                 Phone: 785-368-8222
                                  Fax: 785-291-3614