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Student Scholarship Organizations

In order to assist children whose parents have little or no tax liability, the South Carolina Education Opportunity Act proposes the creation of Student Scholarship Organizations (SSO) which would award scholarships to children whose parent's income is 200% of the federal poverty level or below. These scholarships may be used by low-income students across South Carolina to pay for tuition costs, including transportation. The bill would allow individuals and businesses to reduce their tax liability by contributing to these 501(c)3 organizations that disperse funds to families to help them pay for their children's education.

The South Carolina Education Opportunity Act follows the model of Arizona, Florida and Pennsylvania in the creation of these student scholarship organizations. By law, these SSO's would have to distribute 90% of their receipts as scholarships to low-income children.

Arizona - Arizona also enacted a corporate tax credit in 2006 that allows businesses to receive a dollar-for-dollar credit on their taxes. In 2007, 62 corporations gave $14,258,000 to the student tuition organizations operating in the State of Arizona.

Florida - Florida has a donation tax credit called the "Step Up for Students Corporate Tax Credit Scholarship Program." This program allows corporations to receive a dollar-for-dollar credit for up to 75 percent of its total tax liability for donations to scholarship funding organizations, with a maximum of 5 million dollars per organization. In 2007, corporations donated nearly $87 million dollars, creating over 20,000 scholarships for low-income students.

Pennsylvania - Pennsylvania is home to a donation tax credit program for corporations. The program, called the Educational Improvement Tax Credit Program, is worth 75 percent of a one-year contribution or 90 percent of a two-year contribution to "Scholarship Organizations" or "Educational Improvement Organizations." A corporation may donate $200,000 annually. This year, the program allowed the creation of 44,000 scholarships for low-income students.

For further information, you may access each state programs website for additional information:

Arizona - http://www.revenue.state.az.us/researchstats/schooltaxcredit.htm

Florida - http://www.stepupforstudents.org

Pennsylvania - http://www.paschoolchoice.org/reach