Arkansas taxpayers can direct their taxes specifically toward education

by Laurie Lee ([email protected]) 1,378 views 

This year, hundreds of Arkansas children from income-eligible families received new education options because of generous contributions of business and individual taxpayers who directed their Arkansas state income tax to directly support k-12 scholarships from The Reform Alliance through the aptly named program – the Philanthropic Investment in Arkansas Kids (PIAK).

“No child should be trapped in a lifetime of poverty, which is why programs like the Philanthropic Investment in Arkansas Kids tax credit program are critical,” said Gov. Sarah Sanders. “As Governor, I am supporting this program, along with others, to ensure that parents are empowered to choose the best educational setting for their children. No child should be trapped in a failing school, and all Arkansas children should have access to a high quality education that meets their individual needs.”

The PIAK was created in 2021 by the Arkansas General Assembly, allowing Arkansas taxpayers – business or personal – to contribute. Donors to the program benefit from a 100%, dollar-for-dollar tax credit on their state income taxes to match the amount of their contribution. Thus, the money they already owe to the state, whether for personal and/or business income taxes, can be offset by a contribution to education reducing their liability to zero.

Students whose families are at or below 200% of the federal poverty line can then apply their scholarships to pay for private school tuition and fees at schools that meet criteria to receive the funds.

The result is win-win. Students who need a change of educational environment but whose families could otherwise not afford it gain access to new opportunities, while donors can eliminate their state income tax liability and improve education statewide without incurring any additional cost.

Any individual or business that pays taxes in Arkansas can make a donation. To do so they can contact The Reform Alliance or visit the website, for more information and applications. The Department of Finance and Administration will issue a tax credit certificate directly to the taxpayer for the full contribution amount.

These types of tax-credit scholarship programs currently exist in 21 states nationwide and serve over 312,000 students across the country, according to educational policy research organization EdChoice.

“I support the Philanthropic Investment in Arkansas Kids not just as a taxpayer, but as a board member of The Reform Alliance,” said Will Rockefeller, Senior Vice President of Business Strategy and Development for Bank OZK. “If Arkansas is to succeed economically, it will be because of our children. The PIAK program allows you to join me in directly impacting the future of students who need specific options for their education. Together we can break the chains of poverty constraining them. The net cost to you is nothing; the gain for them is life changing. The return for all of us is greater prosperity for our entire state.”

In Arkansas, the program is growing. Act 237 of 2023, the LEARNS Act, added additional investment in the PIAK program. The LEARNS Act increased the cap amount to $6 million and created a mechanism by which it can increase each year when the cap is reached. The increased cap on tax credits means more opportunity for donors and more scholarship funding for more students in need.

The Reform Alliance is an Arkansas-based, education-focused nonprofit that is one of the scholarship-granting organizations approved by the state. It has successfully administered programs like PIAK in conjunction with the Arkansas Department of Education for several years, including the Succeed Scholarship, created in 2015 for students with learning disabilities, living in foster care and from military families. The growth of the PIAK program allows it and other organizations to serve more students.

Editor’s note: Laurie Lee is the chairman of The Reform Alliance. The opinions expressed are those of the author.