Opportunity Tax Credits for School Foundation Donors

The Oklahoma Equal Opportunity Education Scholarship Act allows Oklahomans who donate to eligible public school foundations or public school districts to reallocate tax liabilities and receive a portion of their gift back in state income tax credits. Gifts to designated educational improvement projects allow donors to support innovative educational opportunities for public school students and save on their state taxes.

Couples filing jointly are eligible to receive a tax credit of up to $2,000; a person filing as an individual can receive up to $1,000; and a qualified business entity can receive up to $100,000 in state tax credits.

You can make a pledge for a one-time gift or a two-year gift. One-time gifts are eligible for a 50% tax credit, while gifts given in two consecutive years are eligible for a 75% tax credit.

You can deduct the portion of your gift not reduced by the tax credit from your federal taxes as a charitable gift contribution if you itemize, making the cost of donating to your local public school even lower.

The most recently updated version of this law went into effect November 1, 2021, with donations made after January 1, 2022, eligible for tax credits. For detailed information on this law, see the resources linked below.

Frequently Asked Questions

Information for school foundation leaders

1. School foundations must be approved by the local board of education prior to accepting qualifying donations. See the sample board policies tab at the bottom of this webpage for an example resolution created by the Oklahoma State School Boards Association.

2. School foundations must register with the Oklahoma Tax Commission. The online registration process is under development and will be made available soon. In the meantime, the OTC has made a paper application available.

3. School foundations must provide a report to the Oklahoma Tax Commission by January 10 each year with information on contributions accepted during the tax year. Please note you will be required to collect and provide donor social security numbers.

4. School foundations must notify contributors of the annual statewide tax credit cap at least once per year. 

5. School foundations must submit an audited financial statement along with information detailing the benefits, successes or failures of the programs funded to the Oklahoma Tax Commission, the President pro Tempore of the Senate, and the Speaker of the House by December 31, 2022, and then once every four years.

Public schools are capped at $25 million in available tax credits each year. However, each district is capped at $200,000 in total available credits. School foundations need to coordinate with their district leadership to determine how best to solicit and track these donations.

Districts and school foundations will be able to identify a funding opportunity for an innovative educational opportunity, set up a designated fund for donations to that opportunity and offer credits to donors to that specific fund.

Information for public school donors

Always consult your professional tax advisor for specific tax advice and interpretation.

Tax credits and tax deductions both decrease the total that you’ll pay in taxes, but they do so in different ways. A tax credit is a dollar-for-dollar reduction of the money you owe, while a tax deduction will decrease your taxable income, leading to a slightly lower tax bill.

Any individual, family or qualified business entity paying taxes in Oklahoma is eligible to contribute to their district or foundation designated fund and receive tax credits.

The law states that a “qualified business entity” includes limited and general partnerships, corporations, subchapter S corporations and limited liability companies that file as a partnership, corporation, subchapter S or sole proprietorship.

All donors making a single-year donation are eligible for Oklahoma income tax credits of 50% of the allowable donation amount. The amount of tax credits may not exceed $1,000 for individual filers, $2,000 for those filing jointly, and $100,000 for qualified businesses entities.

Donors who pledge in writing to give the same amount over TWO consecutive years will receive a 75% tax credit for BOTH years. The annual tax credit limitations apply.

All donors (individuals, families and businesses) should always consult their tax preparer for their specific situation.

Should statewide contributions earn over $25 million in annual tax credits, or should the district reach its $200,000 cap, the credits for all contributors will be reduced pro rata.  Any credits not allowed due to exceeding the tax credit cap will become “suspended” and will be allowed as a carryover credit for the next immediate tax year.

Current law allows for a total of $25 million in tax credits for public schools in a year, with each district capped at $200,000 in available credits. If statewide donations or district donations exceed their caps, the amount of your tax credit will be reduced on a pro rata basis for each class of donor, so that each class of donor (individual or legal business entities) receives that same percentage of tax credit for their donation.

If the tax credit cap is exceeded and the tax credits for that year prorated, the credits not taken will be “suspended” and allowed to be taken in the next immediate tax year.

All districts and school foundations are required to file a report with the Oklahoma Tax Commission on or before January 10 of each year detailing contributions received during the prior calendar year.  The Tax Commission will determine the actual percentage of tax credit available to donors on or before February 15 of each year.

Your tax credits may be used in the immediate following year.  For example, tax credits received from a 2022 donation may be used to offset income taxes on your 2022 Oklahoma tax return filed in 2023.

The tax credit is good up to the state tax liability.  The tax credit from a public school district or school foundation is not refundable.  You may only use this tax credit as an offset to Oklahoma income taxes.  Any tax credit not used in a given tax year due to no tax liability may be carried over for up to three years.

Donations that are postmarked by December 31 will count as a charitable contribution made during that calendar tax year.

The tax credit that you get for donating may be claimed when you file your tax return the following year.  Federal and state tax deductions for your charitable contribution may also be claimed, if you itemize, when filing your annual tax returns.

Sample Documents for School Foundations

The documents featured below have been created in Microsoft Word so they can be edited to include your school foundation logo and appropriate text. Feel free to edit and use these samples in your donor outreach.

Opportunity Tax Credit Law Basics for School Foundations- Informational Webinar

The Opportunity Tax Credit Scholarship program was expanded by the Oklahoma Legislature in the 2021 legislative session. The new law took effect November 1, 2021, and allows public schools and public school foundations to make state tax credits available to their donors. Join us to learn more about the basics of this law and what foundations need to know and do to be ready to take advantage of this new donor opportunity.