Amends existing law to revise provisions regarding the Idaho Parental Choice Tax Credit.

LEGISLATURE OF THE STATE OF IDAHO Sixty-eighth Legislature Second Regular Session - 2026 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 934 BY WAYS AND MEANS COMMITTEE AN ACT1 RELATING TO TAXATION; AMENDING SECTION 63-3029N, IDAHO CODE, TO REVISE2 PROVISIONS REGARDING THE IDAHO PARENTAL CHOICE TAX CREDIT; REPEALING3 SECTION 67-1230, IDAHO CODE, RELATING TO THE IDAHO PARENTAL CHOICE TAX4 CREDIT ADVANCE PAYMENT FUND; AND DECLARING AN EMERGENCY AND PROVIDING5 RETROACTIVE APPLICATION.6

Be It Enacted by the Legislature of the State of Idaho:7

SECTION 1. That Section 63-3029N, Idaho Code, be, and the same is hereby8 amended to read as follows:9 63-3029N. IDAHO PARENTAL CHOICE TAX CREDIT. (1) There is hereby estab-10 lished the Idaho parental choice tax credit.11 (2) For the purpose of this section:12 (a) "Academic instruction" means kindergarten through grade 12 in-13 struction that includes, at a minimum, English language arts, mathemat-14 ics, science, and social studies.15 (b) "Eligible student" means:16 (i) A full-time resident of Idaho who is five (5) to eighteen (18)17 years of age at any time within the tax year; or18 (ii) A child with disabilities requiring ancillary personnel as19 defined in section 33-2001, Idaho Code, who is five (5) to twenty-20 one (21) years of age at any time within the tax year.21 (c) "Federal poverty level" means the federal poverty guidelines pub-22 lished and updated annually by the United States department of health23 and human services.24 (d) "Nonpublic school" means a private school, microschool, or learn-25 ing pod that provides academic instruction to eligible students, which26 academic instruction may be provided in person, online, virtually, or27 through any combination thereof, and such academic instruction is:28 (i) Provided by an accredited school; or29 (ii) Documented in a portfolio of evidence or learning record that30 indicates the student's growth. Records of the instruction shall31 be retained sufficient to establish that the instruction meets32 the requirements of paragraph (a) of this subsection and shall be33 available in the case of any audit by the state tax commission.34 (e) "Parent" means an eligible student's parent, legal guardian, or35 foster parent, if such foster parent is licensed and in good standing36 pursuant to chapter 12, title 39, Idaho Code.37 (f) "Qualified expenses" means kindergarten through grade 12 tu-38 ition or fees for attending a nonpublic school, tutoring of academic39 instruction, nationally standardized assessments, assessments used40 to determine college admission, advance placement examinations, in-41 dustry-recognized certification exams, and preparatory courses for42

2 nationally standardized assessments. "Qualified expenses" also means1 costs for textbooks, curricula used for provided by one (1) or more2 vendors as long as the total curriculum provided to the eligible stu-3 dent and claimed for the credit encompasses no more than kindergarten4 through grade 12 academic instruction, and transportation costs to and5 from a facility incurred for the purposes of receiving kindergarten6 through grade 12 academic instruction, including public transporta-7 tion, ridesharing, and the use of privately owned vehicles, for which8 reimbursement shall use the mileage rate applicable to state employee9 travel in effect at the time the travel occurs. "Qualified expenses"10 shall not include expenses paid with funds received from a grant under11 section 33-1031, Idaho Code, or any reimbursement pursuant to section12 33-4603, Idaho Code.13 (3) The Idaho parental choice tax credit shall be administered as pro-14 vided in this section. For tax year 2025 and subsequent tax years, there15 shall be allowed a refundable tax credit up to five thousand dollars ($5,000)16 per eligible student against the tax imposed by this chapter for any parent:17 (a) Who incurs qualified expenses of up to five thousand dollars18 ($5,000) per eligible student during the tax year, if each eligible19 student is a dependent and is properly claimed on the parent's full-time20 Idaho resident individual income tax return; and21 (b) Who timely and properly files an application.22 (4) The state tax commission shall prescribe forms for the purpose of23 applying for and claiming the credit authorized by this section. The forms24 shall identify the civil and criminal penalties provided in sections 63-304625 and 63-3075, Idaho Code, for providing false and fraudulent tax information26 and shall require the parents to affirm under oath that the information sub-27 mitted in the form is true and accurate. The forms shall also require any28 parent who has previously received a credit authorized by this section to29 certify and attach evidence that the parent completed the satisfaction and30 engagement survey required under subsection (14) of this section. Begin-31 ning in January 2026, and each year thereafter, the application period shall32 open on January 15 and shall remain open for a period of sixty (60) days. The33 state tax commission shall notify parents whether they will receive a credit34 award. Such notification must be within thirty (30) days of the close of the35 application period.36 (5) The state tax commission shall calculate the total amount of cred-37 its claimed in completed applications that qualify under subsection (3) of38 this section. If the total amount does not exceed the annual maximum limit39 provided in subsection (12) of this section, the state tax commission shall40 re-open the application period to receive new applications. Such applica-41 tions shall be accepted until August 15 or until the annual maximum limit is42 reached, whichever is first.43 (6) Credits shall be issued on a yearly basis. For applications re-44 ceived in 2026, the state tax commission shall give priority to parents whose45 modified adjusted gross income as indicated on their most recently filed tax46 return does not exceed three hundred percent (300%) of the federal poverty47 level. Starting in the 2027 application period, the state tax commission48 shall give priority status to applications from parents who received a49 credit in the prior year, followed by parents whose taxable income as indi-50

3 cated on their most recently filed tax return does not exceed three hundred1 percent (300%) of the federal poverty level.2 (7) The refundable tax credit limit under subsection (3) of this sec-3 tion shall be increased to seven thousand five hundred dollars ($7,500) for4 each eligible student up to twenty-one (21) years of age who is also con-5 sidered a child with disabilities requiring ancillary personnel as defined6 in section 33-2001, Idaho Code. Parents claiming an increased credit under7 this subsection shall document the student's diagnosis or other determina-8 tion made by an Idaho licensed health care provider or the student's eligi-9 bility for services under an individualized education program in accordance10 with the federal individuals with disabilities education act.11 (8) The refundable tax credit provided in this section, including the12 advance payment, shall not constitute Idaho taxable income.13 (9) The application forms pursuant to subsection (4) of this section14 shall permit parents to elect a onetime advance payment of the credit for15 each eligible student if a tax credit pursuant to this section has not been16 claimed in the previous year. When a parent elects to receive an advance pay-17 ment pursuant to this subsection, the credit shall be issued in one (1) in-18 stallment, to be paid within sixty (60) days of notifying a parent of such19 credit award but not later than August 30. The state tax commission shall20 approve advance payments only for eligible students whose parents' modified21 adjusted gross income as indicated on their most recently filed tax return22 does not exceed three hundred percent (300%) of the federal poverty level.23 Advance payments made under this subsection may be spent only on qualified24 expenses for which the parent may claim a credit under the provisions of this25 section. In order to enable parents whose modified adjusted gross income26 does not exceed three hundred percent (300%) of the federal poverty level to27 pay for a student's education, an advance payment that is expended on quali-28 fied expenses for an eligible student may be claimed for such expenditure in29 that year and a parental choice tax credit shall be allowed on a parent's tax30 return for that year, subject to the remaining requirements of this chapter.31 Notwithstanding any other provisions of law to the contrary, the state re-32 fund account pursuant to section 63-3067, Idaho Code, shall be used for the33 payment of advance payments of the tax credit pursuant to this subsection,34 and the provisions of section 63-3068, Idaho Code, shall apply to the advance35 payment of the tax credit issued pursuant to this subsection.36 (10) Parents claiming the Idaho parental choice tax credit shall:37 (a) Claim the credit for only qualified expenses incurred on behalf of38 an eligible student;39 (b) Not claim the credit for any semester in which a student was40 enrolled full-time or part-time in a public school, public char-41 ter school, public virtual charter school, public magnet school, or42 part-time public kindergarten. A student participating in activities43 or instruction for which no academic credit is awarded, participating44 in public school sports or other extracurricular activities, transfer-45 ring to and from nonpublic schools during the tax year, home schooling,46 or purchasing and taking Idaho digital learning academy (IDLA) courses47 that are offered for a fee and are not included in IDLA enrollment fund-48 ing by the state pursuant to section 33-1020, Idaho Code, shall not be49 considered so enrolled pursuant to the provisions of this paragraph.50

4 (c) Not claim the credit for any tuition or fees related to academic in-1 struction provided by the parent to such parent's eligible student;2 (d) Ensure no other parent claims a credit for an eligible student. In3 the event more than one (1) parent claims a credit under this section for4 the same eligible student in the same year, the provisions of section5 63-3029L(2), Idaho Code, shall be used to determine which parent is en-6 titled to receive the credit; and7 (e) Fill out and submit the satisfaction and engagement survey provided8 for in subsection (14) of this section. No parent shall be eligible to9 receive a credit under the provisions of this section in a subsequent10 year if such parent has not submitted such survey for the last year that11 such parent received the credit.12 (11) If the credit exceeds the tax imposed by this chapter, the excess13 credit amount shall be refunded to the taxpayer. The state tax commission14 shall design the tax return forms to account for advance payment of the15 credit when calculating the tax imposed by this chapter.16 (12) The total amount of tax credits authorized for all taxpayers under17 this section shall not exceed fifty million dollars ($50,000,000) each tax18 year. In the event the total amount of claims for tax credits allowed by this19 section exceeds fifty million dollars ($50,000,000), the credits shall be20 allowed in full to parents whose applications were properly and timely filed21 and who have priority status under subsection (6) of this section, followed22 by the remaining parents who filed complete applications on a first-come,23 first-served basis, until the annual maximum limit is reached. The state tax24 commission shall create and maintain a waiting list demonstrating who would25 be eligible on a first-come, first-served basis if the annual maximum limit26 for credits allowed under this section is increased.27 (13)(a) Beginning with the first regular session of the sixty-ninth28 Idaho legislature in 2027, the state tax commission shall provide an29 annual report to the governor, the senate local government and taxation30 committee, the house revenue and taxation committee, and the joint fi-31 nance-appropriations committee that shall include:32 (i) The total amount of tax credits provided each year under this33 section;34 (ii) The number of parents who applied each year for the Idaho35 parental choice tax credit;36 (iii) The amount of the average tax credit allowed;37 (iv) The number of credits distributed to parents with an adjusted38 gross income below three hundred percent (300%) of the federal39 poverty level;40 (v) The number of parents who applied each year for the advance41 payment pursuant to subsection (9) of this section, the number of42 advance payments awarded, and the median amount of the advance43 payments awarded;44 (vi) The geographic area of parents applying for the credit;45 (vii) The number of eligible students on the waiting list for each46 year; and47 (viii) A list of the categories of qualified expenses for which48 recipients used the tax credit, which shall include the dollar49

5 amounts for each category listed in subsection (2)(f) of this sec-1 tion.2 (b) The report shall not include any personally identifying informa-3 tion of eligible students, their parents, or their households.4 (14) Beginning in 2026, and each year thereafter, the legislative ser-5 vices office shall deliver to each parent who has received a tax credit under6 the provisions of this section a parent satisfaction and engagement survey7 to evaluate the performance of the nonpublic school that the eligible stu-8 dent attended. The survey shall include but not be limited to the quality of9 school leadership, school safety, student engagement, quality of academic10 instruction, and quality of learning outcomes. The state tax commission11 shall provide the legislative services office with contact information to12 identify each parent receiving a credit and any other information required13 for the legislative services office to properly deliver the surveys required14 under this subsection, and shall deliver the surveys to the parents no later15 than January 15 each year. Each parent shall complete the survey and submit16 the completed survey to the legislative services office no later than March17 15. Beginning in 2027, the legislative services office shall submit a report18 to the governor, the senate local government and taxation committee, the19 house revenue and taxation committee, and the joint finance-appropriations20 committee that shall include a summary of the survey results.21 (15) Any taxpayer receiving an advance payment or claiming a tax credit22 without submission of a timely and properly prescribed form shall be ineli-23 gible to receive such payment or claim such credit. The state tax commission24 shall deny or recapture credits claimed by a parent for expenditures not au-25 thorized by the provisions of this section. If a parent has received an ad-26 vance payment for an eligible student in a previous year, the parent shall27 not claim the credit for qualified expenses incurred in a year that a stu-28 dent ceases to qualify as an eligible student, except for any portion of the29 credit that exceeds the amount of the advance payment received. If a student30 ceases to qualify as an eligible student and the parent has already received31 the credit for that year, an amount of the credit, not exceeding the amount32 of the advance payment received, shall be repaid to or recovered by the state33 tax commission and deposited into the general fund.34 (16) Parents who claim the credit on a tax return without receiving35 prior approval of an application may not receive a credit, and the state36 shall have no liability to such parent.37 (17) The state tax commission shall, in as close to real time as practi-38 cable, make available on its website the annual maximum limit, the cumula-39 tive amount of credits claimed in applications under this section, and the40 cumulative amount of advance payments issued under this section until the41 annual maximum limit is reached.42 (18) The state tax commission shall also keep records of the total ap-43 plications for credits and total claim of credits that exceed the annual max-44 imum limit.45 (19) The state tax commission shall ensure that parents of eligible46 students receive notice in the application that participation in the program47 is a parental placement under 20 U.S.C. 1412 of the federal individuals with48 disabilities education act, along with an explanation of the rights that49 parentally placed students possess under the federal individuals with dis-50

6 abilities education act, including eligibility for equitable services, and1 any applicable state laws and regulations.2 (20) The provisions of this section shall not be construed to permit3 any government agency to exercise control or supervision over any nonpublic4 school or to give the state authority to regulate the education of nonpublic5 school students. A nonpublic school that enrolls a student whose parent6 directs a refundable tax credit to the school pursuant to this section is not7 an agent of the state or federal government. A nonpublic school shall not8 be required to alter its creed, practices, admissions policy, or curriculum9 in order to accept students whose payment of tuition or fees stems from a10 refundable tax credit under this section.11

SECTION 2. That Section 67-1230, Idaho Code, be, and the same is hereby12 repealed.13

SECTION 3. An emergency existing therefor, which emergency is hereby14 declared to exist, this act shall be in full force and effect on and after its15 passage and approval, and retroactively to January 1, 2026.16