An Iowa income tax credit is available to taxpayers who donate to a School Tuition Organization (STO) during the tax year. The tax credit is equal to 75% of the amount of the contribution made to the STO. The STO will be authorized by the Department to issue tax credit certificates to taxpayers who make contributions to the STO. The amount of certificates to be issued is determined by Iowa Code section 422.11S.
List items for School Tuition Organization Tax Credit
To qualify as an STO, a charitable organization must meet the requirements provided in Iowa Code section 422.11S. The organization must:
Be exempt from federal taxation under Internal Revenue Code section 501(c)(3).
Allocate at least ninety percent of its annual revenue in tuition grants for children to allow them to attend a qualified school of their parents’ choice. A qualified school is a nonpublic elementary or secondary school in this state which is accredited under Iowa Code section 256.11 and adheres to the provisions of the federal Civil Rights Act of 1964 and chapter 216.
Only award tuition grants to children who reside in Iowa.
Provide tuition grants to students without limiting availability to only students of one school.
Only provide tuition grants to eligible students.
Prepare an annual reviewed financial statement certified by a public accounting firm.
For contributions to an STO to qualify for the STO tax credit, the STO must register with the Department. Once registered, no subsequent action is required by the STO unless there is a change to the qualified schools which the STO serves.
An STO must register by emailing [email protected]. The email shall include proof of section 501(c)(3) status and a list of the schools the school tuition organization serves.
An STO must make annual reports to the Department. These are due by January 12. These reports must provide:
Names and address of board members, along with the chairperson of the board.
The total number and dollar value of contributions received during the prior year.
The total number and dollar value of tax credits approved.
A list of the individual donors for the previous year, including the dollar amount of each contribution, the dollar amount of each tax credit certificate, and the certificate number.
The total number of children utilizing tuition grants for the school year in progress and the total dollar amount of the grants.
The name and address of each represented school at which tuition grants are being utilized, detailing the number of students and the total dollar amount of grants being utilized at each school that the STO serves.
