Iowa

School Tuition Organization Tax Credit

  • Tax-Credit Scholarship
  • Enacted 2006
  • Launched 2006

Iowa offers tax credits to taxpayer donors supporting School Tuition Organizations (STOs), nonprofits that provide tuition scholarships to students to attend accredited private schools. The program helps Iowa students from low-income households afford the schooling options that best fit their needs.

We do not administer this program.

Eligibility Test Apply

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  • 10,239

    Scholarships Awarded (2022–2023)

  • 68%

    of Families with Children Income-eligible Statewide

  • 12

    Scholarship Organizations (2021—22)

  • 143

    Participating Schools (2021—22)

  • $2,062

    Average Scholarship Value (2022–2023)

  • 15%

    Value as a Percentage of Public School Per-Student Spending

Iowa’s School Tuition Organization Tax Credit Participation

Students Participating
School Year Ending
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Student Funding

Use of Funds

STOs provide scholarships called “tuition grants” to cover all, or part, of the tuition at an accredited Iowa nonpublic school participating in the program.

Funding Amount and Source

The program is funded by donations to STOs. Scholarship amounts are determined by STOs and capped only by a participating student’s annual tuition amount. Eligible donors include individuals and corporations. Donor contributions to STOs are worth 75% of the value, with an annual maximum equal to the donor’s tax liability. Any credit in excess of the tax liability is not refundable, but the excess for the tax year may be credited to the tax liability for the following five tax years or until depleted, whichever is earlier. A maximum of $20 million in tax-credit funding for scholarships is available annually. Total credits claimed cannot exceed $20 million, meaning roughly 9,700 students can participate, or less than 2% of Iowa’s K–12 student population.

(Last updated July 15, 2024)

Student Eligibility

Eligible students may receive a scholarship to attend an accredited Iowa nonpublic school if their family household income does not exceed 400% of the Federal Poverty Level or FPL ($124,800 for a family of four in 2024–2025).

(Last updated July 15, 2024)

EdChoice Expert Feedback

Iowa’s tax-credit scholarship program helps more than twelve thousand students access schools that are the right fit for them, but policymakers could do more to expand educational opportunity.  Eligibility for the scholarships is limited to 400 percent of the federal poverty line ($120,000 for a family of four in 2023–24). Seven out of ten Iowa students are eligible for a scholarship though less than 10 percent of students statewide actually use a scholarship. (Additionally, Iowa families are eligible for an education savings account program and a very modest tax credit for tuition and textbooks.)  The average scholarship size is only about $1,500, which is roughly 13 percent of the average expenditure per student at Iowa’s district schools. Tax credits are worth 75 percent of the value of the contributions to scholarship organizations. Only $20 million in tax credits are available annually, which is equivalent to just 0.6 percent of Iowa’s total K–12 revenue.   To expand access to educational choice, Iowa policymakers should dramatically increase the available tax credits, increase the credit value to 100 percent, and expand eligibility to all students (prioritizing scholarships based on need).   Iowa’s scholarship program avoids unnecessary and counterproductive regulations.   (Last updated December 18, 2023)

Rules and Regulations

Participant and Family Guidelines

  • Income Limit: 400% x FPL
  • Prior Year Public School Requirement: None
  • Enrollment Cap: None
  • Scholarship Cap: Full Tuition
  • Testing Mandates: None
  • Credit Value: 75 %
  • Per Donor Credit Cap: None
  • Budget Cap: $20 million

Education Provider Guidelines:

  • Accredited
  • Complies with state and federal nondiscrimination laws

STO Guidelines:

  • Use at least 90% of contributions for scholarships
  • Make scholarships available for more than one school
  • Annual review of financial statements by a public accounting firm
  • Submit data to the state on accepted contributions, grants awarded and participating schools

(Last updated July 15, 2024)

Governing Statutes

Iowa Stat. §422.11S

(Last updated July 15, 2024)