Florida Tax Credit Scholarship

What is the Florida Tax Credit Scholarship Program?

The Florida Tax Credit Scholarship Program (FTC) was established in 2001 to provide an income tax credit for corporations that contribute money to nonprofit Scholarship-Funding Organizations (SFOs) that award scholarships to students from families with limited financial resources. In 2009, the program was expanded to provide credits against the insurance premium tax for contributions to eligible non-profit SFOs. In 2010, the program was expanded to provide tax credits against severance taxes on oil and gas production, self-accrued sales tax liabilities of direct pay permit holders, and alcoholic beverage taxes on beer, wine, and spirits.

The purpose of the tax credit is to:

  • Encourage private, voluntary contributions to nonprofit SFOs;
  • Expand education opportunities for children from families that have limited financial resources; and
  • Enable children to achieve a greater level of excellence in their education.

To expand educational opportunities for children of families that have limited financial resources and to enable children in this state to achieve a greater level of excellence in their education, the Florida Legislature created the Florida Tax Credit Scholarship Program in 2001. The law provides for state tax credits for contributions to nonprofit scholarship funding organizations, (SFOs). The SFOs then award scholarships to eligible children of low-income families.

The tax credit cap for the current year is $559,082,031. The tax credit cap amount will increase to $698,852,539 for the 2017-2018 state fiscal year.

Who is eligible for a scholarship from a nonprofit scholarship-funding organization under this program?

The Florida Tax Credit Scholarship Program no longer requires prior year enrollment in a public school. For the 2016-2017 school year, a student is eligible for a scholarship from a nonprofit SFO through this program, if:

  1. The student is currently placed, or during the previous state fiscal year was placed, in foster care, OR
  2. The student qualifies for free or reduced-price school lunches under the National School Lunch Act or is on the direct certification list.
  3. Beginning with the 2016-17 school year, contingent on available funds, a student may be eligible for a scholarship if the student’s household income does not exceed 260 percent of the federal poverty level.

What are eligible nonprofit scholarship-funding organizations?
Eligible nonprofit SFOs are charitable organizations that are exempt from the federal income tax as defined in s. 501(c)(3) of the Internal Revenue Code. Eligible nonprofit SFOs are required to meet the following criteria:

  • Provide scholarships from eligible contributions to qualified students;
  • Give priority to qualified students who received a scholarship from an eligible SFO during the previous year;
  • Beginning with the 2016-17 school year, give priority to new applicants whose household income levels do not exceed 185 percent of the federal poverty level or who are in foster care.
  • Expend for annual or partial-year scholarships an amount equal to or greater than 75% of the net eligible contributions remaining after administrative expenses during the state fiscal year in which the contributions are collected;
  • Provide a surety bond or letter of credit in an amount equal to 25 percent of the scholarship funds anticipated for each school year or $100,000, whichever is greater.
  • May use up to 3% of eligible contributions for administrative expenses if the SFO has operated for the last 3 state fiscal years without negative financial findings; and
  • Provide the Auditor General and the Department of Education with an annual financial and compliance audit of their accounts and records conducted by independent certified public accountants.