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About $2 million deducted from Oklahoma school choice tax credits to cover parents’ debts

Nuria Martinez-Keel
Oklahoma Voice
Nuria Martinez-Keel

Almost $2 million from a tax credit program intended to help families afford private school instead went to parents’ debts and delinquent taxes.

The Oklahoma Tax Commission has deducted 1,249 parental choice tax credit payments from applicants who had unpaid taxes or a debt claim filed against them, the agency reported in response to an open records request from Oklahoma Voice.

Payments were reduced by a total of $1,926,240. The program’s total budget this year is $150 million.

Gov. Kevin Stitt has signed into law a bill meant to prevent future deductions. House Bill 3388 clarifies the credits are non-taxable income and can’t be reduced for outstanding debts.

The legislation that created the tax credit program last year included no such prohibition, prompting lawmakers to clarify the law this session.

“The Tax Commission was following the law as written at the time of implementation,” Stitt said in a statement. “I’m always grateful when agencies operate with due diligence. Moving forward, lawmakers have changed that statute and I have signed that into law.”

Senate President Pro Tem Greg Treat, R-Oklahoma City, said the clarification was necessary so a parent’s debt wouldn’t hamper a student’s opportunity to attend private school.

“We don’t tell a child they can’t go to public school because their parent’s behind on taxes, and we’re not going to tell a child in need that they can’t go to a private school that meets their needs based on their parent’s lack of compliance,” Treat said while speaking with reporters last week.

Legislative Democrats questioned whether the measure is another hand-out to families already enrolled in exclusive schools.

“For anybody else, if they had a tax liability, they would be required to pay it, and these folks are not,” Rep. Andy Fugate, D-Del City, said. “So, we’re giving them taxpayer dollars, and we’re saying you don’t have to pay what you owe the people of Oklahoma.”

The refundable tax credits offer $5,000 to $7,500, depending on total household income, to offset costs of sending children to private schools. Although a credit reduces a family’s state tax obligation, the commission issues a check to recipients to reimburse approved educational expenses, like tuition, tutoring or testing fees.

The initiative launched in December to significant demand. About 36,000 people have applied, most of whom did so in the first 90 minutes of the application window.

There is no income limit to apply, but children from households earning $150,000 or below had priority consideration.

The Tax Commission is still reviewing applications and disbursing funds. About 16,800 priority applicants and 4,300 without priority have been approved, accounting for $125 million of the $150 million budget, the agency reported this week.

Oklahoma will allocate $200 million for the program in 2025 and $250 million in 2026.

Oklahoma Voice is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Oklahoma Voice maintains editorial independence.