Iowa

Tax Credits for Educational Expenses

Iowa provides a tax credit covering educational expenses for students in any private or public school, including tuition, books, and lab or activity fees. The credit is worth a maximum of $250. Parents receive a tax credit worth 25 percent of their expenditures, up to a maximum credit of $250 per family. To get the maximum $250 credit, parents must spend $1,000 in educational expenses; they also must have a state tax liability of at least $250 because the nonrefundable credit cannot reduce a person's tax burden to less than zero. The program launched in 1987.  

Tax Credits for School Tuition Organizations

Iowa provides a credit on personal income taxes for donations to school tuition organizations (STOs), which are privately run nonprofit organizations that support private-school scholarships. The credit is worth 65 percent of the value of the donation. The value of the tax credit is also limited by a statewide cap. A maximum of $7.5 million in tax credits is available. Each STO can grant tax credits to its donors up to its share of this statewide limit, and each STO's share is determined by the enrollment at the schools it serves. In 2009, Iowa passed a new law that will now allow corporations to contribute to scholarship organizations. Corporations will receive the 65% tax credit on donations just as individuals have been able to do. This program launched in 2006.