Schools; Parental Choice Tax Credit Program; increasing the amount of credits authorized.

An Act
ENROLLED HOUSE
BILL NO. 3705 By: Hilbert and Caldwell (Chad)
of the House

and

Paxton and Daniels of the
Senate

An Act relating to schools; amending Section 2,
Chapter 278, O.S.L. 2023, as last amended by Section
2, Chapter 295, O.S.L. 2025 (70 O.S. Supp. 2025,
Section 28-101), which relates to the Parental Choice
Tax Credit Program; increasing the amount of credits
authorized for 2027 fiscal year and subsequent fiscal
years.

SUBJECT: Schools

BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:

SECTION 1. AMENDATORY Section 2, Chapter 278, O.S.L.
2023, as last amended by Section 2, Chapter 295, O.S.L. 2025 (70
O.S. Supp. 2025, Section 28-101), is amended to read as follows:

Section 28-101. A. As used in the Oklahoma Parental Choice Tax
Credit Act:

1. "Accrediting association" means a recognized legal entity
that meets the accreditation requirements set by the State Board of
Education, another accrediting association approved by the State
Board of Education, or a legal entity that accredits education
organizations in multiple states, whose purpose is to verify that an
education program meets or exceeds predetermined criteria, and
monitor the education organization during the time it is accredited
by completing regular reevaluations and on-site inspections of the
education program;

2. "Commission" means the Oklahoma Tax Commission;

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3. "Curriculum" means a complete course of study for a
particular content area or grade level;

4. "Department" means the State Department of Education;

5. "Education service provider" means a person, business,
public school district, public charter school, magnet school, or
organization that provides educational goods and/or services to
eligible students in this state;

6. "Eligible student" means a resident of this state who is
eligible to enroll in a public school in this state. Eligible
student shall include a student who is enrolled in and attends or is
expected to enroll in a private school in this state accredited by
the State Board of Education or another accrediting association or a
student who is educated pursuant to the other means of education
exception provided for in subsection A of Section 10-105 of this
title;

7. "Qualified expense" for the purpose of claiming the credit
authorized by paragraph 1 of subsection C of this section means
tuition and fees at a private school in this state accredited by the
State Board of Education or another accrediting association. Such
private school shall comply with the provisions of subsection L of
this section. Provided, the amount of tuition and fees considered a
qualified expense pursuant to this paragraph shall not include
tuition and fees paid with any scholarship or tuition and fees
discounted or otherwise reduced by the school;

8. "Qualified expense" for the purpose of claiming the credit
authorized by paragraph 2 of subsection C of this section means the
following expenditures:

a. tuition and fees for nonpublic learning programs,
online or in person,

b. academic tutoring services provided by an individual
or a private academic tutoring facility,

c. textbooks, curriculum, or other instructional
materials including, but not limited to, supplemental
materials or associated online instruction required by
an education service provider, and

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d. fees for nationally standardized assessments
including, but not limited to, assessments used to
determine college admission and advanced placement
examinations as well as tuition and fees for tutoring
or preparatory courses for the assessments; and

9. "Taxpayer" means a biological or adoptive parent,
grandparent, aunt, uncle, legal guardian, custodian, or other person
with legal authority to act on behalf of an eligible student.

B. There is hereby created the Oklahoma Parental Choice Tax
Credit Program to provide an income tax credit to a taxpayer for
qualified expenses to support the education of eligible students in
this state.

C. For the tax year 2024 and subsequent tax years, and fiscal
year 2026 and subsequent fiscal years, there shall be allowed
against the tax imposed by Section 2355 of Title 68 of the Oklahoma
Statutes a credit for any Oklahoma taxpayer who incurs a qualified
expense on behalf of an eligible student, to be administered subject
to the following amounts:

1. If the eligible student attends a private school in this
state accredited by the State Board of Education or another
accrediting association, the annual maximum credit amount for tax
year 2024, fiscal year 2026, and each subsequent fiscal year shall
be:

a. Seven Thousand Five Hundred Dollars ($7,500.00) or the
amount of tuition and fees for the private school,
whichever is less, if the combined adjusted gross
income of the parents or legal guardians of the
eligible student during the second preceding tax year
does not exceed Seventy-five Thousand Dollars
($75,000.00),

b. Seven Thousand Dollars ($7,000.00) or the amount of
tuition and fees for the private school, whichever is
less, if the combined adjusted gross income of the
parents or legal guardians of the eligible student
during the second preceding tax year is more than
Seventy-five Thousand Dollars ($75,000.00) but does
not exceed One Hundred Fifty Thousand Dollars
($150,000.00),

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c. Six Thousand Five Hundred Dollars ($6,500.00) or the
amount of tuition and fees for the private school,
whichever is less, if the combined adjusted gross
income of the parents or legal guardians of the
eligible student during the second preceding tax year
is more than One Hundred Fifty Thousand Dollars
($150,000.00) but does not exceed Two Hundred Twenty-
five Thousand Dollars ($225,000.00),

d. Six Thousand Dollars ($6,000.00) or the amount of
tuition and fees for the private school, whichever is
less, if the combined adjusted gross income of the
parents or legal guardians of the eligible student
during the second preceding tax year is more than Two
Hundred Twenty-five Thousand Dollars ($225,000.00) but
does not exceed Two Hundred Fifty Thousand Dollars
($250,000.00), or

e. Five Thousand Dollars ($5,000.00) or the amount of
tuition and fees for the private school, whichever is
less, if the combined adjusted gross income of the
parents or legal guardians of the eligible student
during the second preceding tax year is more than Two
Hundred Fifty Thousand Dollars ($250,000.00);

2. For tax year 2024 and subsequent tax years, the maximum
credit amount shall be One Thousand Dollars ($1,000.00) in qualified
expenses per eligible student in each tax year if the eligible
student is educated pursuant to the other means of education
exception provided for in subsection A of Section 10-105 of this
title. To claim the credit, the taxpayer shall submit to the
Commission receipts for qualified expenses as defined by paragraph 8
of subsection A of this section;

3. If the eligible student attends a private school in this
state, accredited by the State Board of Education or another
accrediting association, that exclusively serves students
experiencing homelessness, the credit amount shall be Seven Thousand
Five Hundred Dollars ($7,500.00) or the amount of the cost to
educate the eligible student at the private school, whichever is
less;

4. If the eligible student attends a private school in this
state, accredited by the State Board of Education or another
accrediting association, that primarily serves financially
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disadvantaged students, the credit amount shall be the maximum
credit amount authorized by paragraph 1 of this subsection or the
amount of the cost to educate the eligible student at the private
school, whichever is less. The cost to educate the eligible student
shall be equal to the average cost to educate all students attending
the private school, which shall be calculated by dividing the
private school's total expenditures in the previous year by the
total enrollment in the previous school year. A private school
shall be deemed to be primarily serving financially disadvantaged
students if ninety percent (90%) of the private school's admissions
are based on enrolling students whose gross family income is two
hundred fifty percent (250%) of the federal poverty threshold or
below;

5. The taxpayer shall retain all receipts of qualified expenses
as proof of the amounts paid each tax year the credit is claimed and
shall submit them to the Commission upon request;

6. If the credit exceeds the tax imposed by Section 2355 of
Title 68 of the Oklahoma Statutes, the excess amount shall be
refunded to the taxpayer; and

7. Credits claimed by a taxpayer pursuant to the provisions of
this section shall not be used to offset or pay the following:

a. delinquent tax liability,

b. accrued penalty or interest from the failure to file a
report or return,

c. accrued penalty or interest from the failure to pay a
state tax within the statutory period allowed for its
payment,

d. tax liability of the taxpayer from any prior tax year,
or

e. any debt, unpaid fine, final judgment, or claim filed
with the Commission by a qualified entity as defined
in Section 205.2 of Title 68 of the Oklahoma Statutes.

D. 1. a. For tax year 2024, the total amount of credits
authorized by paragraph 1 of subsection C of this
section shall not exceed One Hundred Fifty Million
Dollars ($150,000,000.00).
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b. For the period of January 1, 2025, through June 30,
2025, the total amount of credits authorized by
paragraph 1 of subsection C of this section shall not
exceed One Hundred Million Dollars ($100,000,000.00).
The Commission shall not require a taxpayer who
received a credit pursuant to paragraph 1 of
subsection C of this section in tax year 2024 to
reapply for a credit payable during the period
described in this subparagraph. The Commission shall
base the credit amount payable for the spring 2025 on
the fall 2024 installment disbursement payment amount.

c. For fiscal year 2026 and subsequent fiscal years, the
total amount of credits authorized by paragraph 1 of
subsection C of this section shall not exceed Two
Hundred Fifty Million Dollars ($250,000,000.00).

d. For fiscal year 2027 and subsequent fiscal years, the
total amount of credits authorized by paragraph 1 of
subsection C of this section shall not exceed Two
Hundred Seventy-five Million Dollars
($275,000,000.00).

2. For tax year 2026 and subsequent tax years, the total amount
of credits authorized by paragraph 2 of subsection C of this section
shall not exceed Five Million Dollars ($5,000,000.00). The Oklahoma
Tax Commission shall annually calculate and publish a percentage by
which the credits authorized by this section shall be reduced so the
total amount of credits used to offset tax does not exceed the
annual limit. The formula to be used for the percentage adjustment
shall be Five Million Dollars ($5,000,000.00) divided by the amount
of credit claimed in the second preceding tax year. In the event
the total tax credits authorized by this section exceed the annual
limit in any tax year, the Tax Commission shall permit any excess
but shall factor such excess into the percentage adjustment formula
for subsequent tax years.

3. If a taxpayer, on behalf of an eligible student in the
program, chooses not to participate, is no longer eligible to
participate, or chooses to forgo participation in the program for
any reason, the credit authorized by paragraph 1 of subsection C of
this section but not used and not reallocated pursuant to paragraph
3 of subsection H of this section shall be added to the subsequent
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fiscal year limitation as provided in paragraph 1 of this
subsection.

E. The Commission shall prescribe applications for the purposes
of claiming the credits authorized by the Oklahoma Parental Choice
Tax Credit Act and a deadline by which applications shall be
submitted. A taxpayer claiming the credit authorized by paragraph 1
of subsection C of this section shall submit an application
prescribed by the Commission to receive the credit based on the
enrollment verification form submitted pursuant to this subsection,
but in no event shall a payment exceed the amount of the credit
authorized by paragraph 1 of subsection C of this section. If an
eligible taxpayer provides documentation on the application that he
or she is a recipient of income-based government benefits including
the Supplemental Nutrition Assistance Program (SNAP), Temporary
Assistance for Needy Families (TANF), or the Oklahoma Medicaid
Program commonly known as SoonerCare, the eligible taxpayer shall
not be required to provide additional income verification. The
Department of Human Services and the Oklahoma Health Care Authority
shall, upon request by the Oklahoma Tax Commission, verify whether
an applicant receives income-based government benefits. The
taxpayer shall provide authorization for the Oklahoma Tax Commission
to disclose application data to the Department of Human Services
and/or the Oklahoma Health Care Authority, and for the Department of
Human Services and/or the Oklahoma Health Care Authority to provide
confirmation of benefits to the Oklahoma Tax Commission for purposes
of verifying that the taxpayer is a current recipient of SNAP, TANF,
or Oklahoma Medicaid Program benefits; provided, the information
shall not be used for any other purpose. A taxpayer claiming the
credit authorized by paragraph 1 of subsection C of this section
shall submit to the Commission an enrollment verification form from
the private school in which the eligible student is enrolled or is
expected to enroll with the tuition and fees to be charged the
taxpayer for the applicable school year. In reviewing applications
submitted by eligible taxpayers to determine whether they qualify
for a credit authorized by paragraph 1 of subsection C of this
section, the Commission shall give first preference in making
payments to taxpayers who qualify pursuant to subparagraphs a and b
of paragraph 1 of subsection C of this section. The Commission
shall give second preference in making payments to taxpayers who
qualify and have received the credit in the prior year. For credits
issued in the 2026-2027 school year and subsequent school years, the
application period shall be open March 15 through June 15 prior to
the beginning of each school year. For any eligible student whose
parents or legal guardians have a combined adjusted gross income
ENR. H. B. NO. 3705 Page 8
that does not exceed One Hundred Fifty Thousand Dollars
($150,000.00) or qualified and received credit in the prior year,
applications shall be submitted to the Commission within the first
sixty (60) days of the opening of the application period to receive
priority consideration. For students enrolled in the full school
year, the full credit amount authorized for the school year shall be
paid no later than August 30.

F. Taxpayers claiming the credit shall:

1. Only claim the credit for qualified expenses as defined in
paragraphs 7 and 8 of subsection A of this section to provide an
education for an eligible student;

2. Ensure no other person is claiming a credit for the eligible
student;

3. Not claim the credit for an eligible student who enrolls as
a full-time student in a public school district, public charter
school, public virtual charter school, or magnet school;

4. Comply with rules and requirements established by the
Commission for administration of the Oklahoma Parental Choice Tax
Credit Program; and

5. Notify the Commission not later than thirty (30) days after
the date on which the eligible student:

a. enrolls in a public school, including an open-
enrollment charter school,

b. enrolls in a nonaccredited private school,

c. graduates from high school, or

d. is no longer utilizing credits authorized by paragraph
1 of subsection C of this section for any reason.

G. Eligible students may accept a scholarship from the Lindsey
Nicole Henry Scholarships for Students with Disabilities Program
created by Section 13-101.2 of this title while participating in the
Oklahoma Parental Choice Tax Credit Program.

H. 1. The Commission shall have the authority to conduct an
audit or contract for the auditing of receipts for qualified
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expenses submitted pursuant to paragraph 2 of subsection C of this
section.

2. The Commission shall be authorized to recapture the credits
otherwise authorized by the provisions of the Oklahoma Parental
Choice Tax Credit Act on a prorated basis if an audit conducted
pursuant to this subsection shows that the credit was claimed for
expenditures that were not qualified expenses or it finds that the
taxpayer has claimed an eligible student who no longer attends a
private school or has enrolled in a public school in the state.

3. The Commission shall be authorized to reallocate credits for
the current application year to the next eligible taxpayer in line
when a taxpayer, on behalf of an eligible student in the program,
chooses not to participate, is no longer eligible to participate, or
chooses to forgo participation in the program for any reason no
later than September 1 following the opening of the application
period of each year.

4. The Commission shall provide notification of approval status
to applicants within thirty (30) days of closure of the application
window. Notice to applicants with an eligible student, whose
parents or legal guardians have a combined adjusted gross income of
more than One Hundred Fifty Thousand Dollars ($150,000.00), shall be
sent within thirty (30) days or no later than thirty (30) days after
the last day of the priority consideration period.

I. In the event of a failure of revenue pursuant to the
Oklahoma State Finance Act, the tax credits otherwise authorized in
subsection C of this section shall be reduced proportionately to the
reduction in the amount of money appropriated to the State Board of
Education for the financial support of public schools for the fiscal
year in which the failure of revenue occurs.

J. The Commission shall make available on its website to be
updated monthly:

1. The total amount of credits claimed each year pursuant to
paragraphs 1 through 4 of subsection C of this section;

2. The amount of credits claimed and number of students awarded
each fiscal year pursuant to paragraph 1 of subsection C of this
section disaggregated by income categories;

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3. The total amount of credits claimed and number of students
awarded who attended a public school in the semester immediately
preceding the school year for which the application is made each
year; and

4. The total number of applications denied and total amount of
credits the denied applications represent for each fiscal year.

K. Credits received pursuant to the Oklahoma Parental Choice
Tax Credit Act shall not constitute taxable income to a taxpayer who
received the credit on behalf of an eligible student.

L. No later than June 15 of each year, each participating
private school shall electronically provide information to confirm
student enrollment and tuition information for the fall and spring
semesters of the preceding school year and any other information
requested by the Oklahoma Tax Commission. Failure to provide this
information may result in denial of private school participation in
subsequent school years.

M. An eligible and participating private school as of April 15,
2025, shall have until March 1, 2027, to meet the accreditation
requirements of this section.

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Passed the House of Representatives the 9th day of April, 2026.

Presiding Officer of the House
of Representatives

Passed the Senate the 27th day of April, 2026.

Presiding Officer of the Senate

OFFICE OF THE GOVERNOR
Received by the Office of the Governor this ____________________
day of ___________________, 20_______, at _______ o'clock _______ M.
By: _________________________________
Approved by the Governor of the State of Oklahoma this _________
day of ___________________, 20_______, at _______ o'clock _______ M.

_________________________________
Governor of the State of Oklahoma

OFFICE OF THE SECRETARY OF STATE
Received by the Office of the Secretary of State this __________
day of ___________________, 20_______, at _______ o'clock _______ M.
By: _________________________________