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Increased tax credit for Iowans who donate to student tuition organizations

Mason City, Newman Catholic

Areal shot of Newman Catholic schools.

Individuals in Iowa who make donations towards school tuition organizations, or STOs, will receive an increased tax credit thanks to a recent statewide bill.

The tax credit when donating to STOs went from 65 percent to 75 percent due to the recent signing of the education bill by Gov. Kim Reynolds. This is the same education bill that allowed schools to go mask-free on May 20.

With the new tax credit, if a donor made a $1,000 contribution to an STO, they are eligible for a $750 credit applied to their Iowa income tax liability.

An STO is a charitable organization that helps middle or low income families receive tuition assistance toward non-public education for children. Newman Catholic school system is a large user of STO funds, with 40 percent of their students in 2020-21 receiving assistance from an STO.

Newman Catholic principal Tony Adams said that the updated tax credit will be more appealing to those who want to donate money towards STOs.

The increased tax credit will help provide more funding towards scholarships for families who want to send their children to a non-public school, according to Adams.

Deacon and Director of Our Faith School Tuition Organization Brian Zeman said that the new tax credit is now the largest one within the state of Iowa.

The STO program began in 2006 through the School Choice Act with a 65 percent tax credit and a cap of $2.5 million because it was half year. The cap grew to $5 million per year in 2007.

Now with Reynolds signing the recent education bill, donors are able to receive a 75 percent tax credit and a cap of $20 million statewide.

“It is a really big win for the families who might not be afford tuition,” Zeman said about the increased tax credit.

Within the state of Iowa, there are currently twelve student tuition organizations, according to Zeman. All twelve of the student tuition organizations represent over 33,500 students in Iowa. Each STO has a list of nonpublic schools that they serve and give tuition grants to.

Any of the funds given to an STO have strict oversight by the organizations themselves when the money is in their possession and to whom they go.

Abby covers education and public safety for the Globe Gazette. Follow her on Twitter at @MkayAbby. Email her at Abby.Koch@GlobeGazette.com

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