Education Tax Credit Program

Students must be between ages 5 and 20 and come from households where family income is less than 300% of the Federal Poverty Level or FPL ($93,600 for a family of four in 2024–2025). In the first two years of the program, scholarship organizations were required to award 70% of scholarship funds to students who previously attended a public school (“switchers”) or to switchers who already received a scholarship. However, beginning in the third year, the percentage of scholarship funds required to go to switchers is reduced by 5% each year. In 2024–2025, the program will require at least 20% of scholarship recipients to be switchers. Additionally, at least 40% of the total scholarship organization’s award must be given to students who qualify for the federal Free and Reduced-Price Lunch program. _(Last updated July 9, 2024)_

Qualifying expenses include tuition; the cost of a public school located outside the resident school district; higher education; tutoring; distance education program; and home education expenses. _(Last updated July 9, 2024)_

This program is funded by donations from individuals subject to New Hampshire’s interest and dividends tax and businesses, who may receive 85% tax credits for donations to Scholarship Organizations (SOs). Homeschooling students may receive reimbursements for educational expenses. The average scholarship size is about $3,700, which is about 19% of the average expenditure per student at New Hampshire’s district schools, though the cap on scholarship values is somewhat higher. Tax credits are worth 85% of the value of the contributions to scholarship organizations. Total credits claimed cannot exceed $5.1 million, meaning roughly 1,700 students can participate, or less than 1% of New Hampshire’s K–12 student population. New Hampshire’s tax-credit scholarship program deserves credit for being the most expansive in the nation in terms of how parents may use scholarship funds to customize their child’s education. It more closely resembles education savings accounts than other tax-credit scholarship programs. The program also avoids unnecessarily burdensome school regulations. _(Last updated July 9, 2024)_

On August 28, 2014, the New Hampshire Supreme Court in _Duncan v. State_ issued a decision upholding the state’s tax-credit scholarship program. This case positioned individuals represented by the American Civil Liberties Union (ACLU) and Americans United for Separation of Church and State (AU) against the state’s new tax-credit scholarship program. In the decision, the court dismissed the lawsuit due to lack of standing by the defendants; the court reasoned they were unable to show harm caused by the program. The justices overturned a previous lower court ruling, which disallowed scholarships to schools that were religiously affiliated. _Duncan v. State_ , 102 A.3d 913 (N.H. 2014). _(Last updated July 9, 2024)_