TITLE V
TAXATION

Chapter 77-G
EDUCATION TAX CREDIT

Section 77-G:1

    77-G:1 Definitions. –
The following definitions shall apply in this chapter:
I. "Adequacy cost" means the total cost of the opportunity for an adequate education as defined in RSA 198:40-a.
II. "Adequacy grant" means the grant calculated under RSA 198:41, or for a chartered public school, the amount calculated under RSA 194-B:11.
III. "Business organization" shall be as defined in RSA 77-A:1, I.
IV. "Business enterprise" shall be as defined in RSA 77-E:1, III.
V. [Repealed.]
VI. "Educational expenses" means the tuition cost of an eligible student to attend a public or nonpublic school, excluding students who were placed into a nonpublic school by their school district, the cost of college or university, accredited tutor or tutoring facility, or distance education program. Educational expenses shall not include fees or expenses related to participation in athletic programs, transportation expenses, or the cost of a parent's time expended in the home schooling of his or her child.
VII. "Education tax credit application" means a document developed by the department of revenue administration and submitted by a business organization, business enterprise, or individual that contains at a minimum:
(a) The business organization's, business enterprise's, or individual's name, address, and federal taxpayer identification number.
(b) A contact person's name, title, and phone number.
(c) The requested donation amount.
(d) A signed statement certifying that the business organization, business enterprise, or individual agrees to make donations in accordance with the requirements established in this chapter.
VIII. "Eligible student" means a New Hampshire resident who is at least 5 years of age and no more than 20 years of age, who has not graduated from high school, and
(a)(1) Who is currently attending a New Hampshire public school, including a chartered public school, and for whom the adequacy grant in the next school year would be reduced if the student were removed from the average daily membership calculation, or who is entering kindergarten or first grade; or
(2) Who received a scholarship under subparagraph (1) or this subparagraph in the prior program year; or
(3) Who does not qualify under subparagraph (1) or (2); and
(b) Whose annual household income is less than or equal to 300 percent of the federal poverty guidelines as updated annually in the Federal Register by the United States Department of Health and Human Services under the authority of 42 U.S.C. section 9902(2). The scholarship organization shall verify eligibility under this subparagraph.
VIII-a. "Individuals," for purposes of being granted credits under this chapter, shall include any entity having taxable interest and dividend income as described in RSA 77:3.
IX. "Nonpublic school" shall be as defined in RSA 193:1, I(a) and (d).
X. "Owner or operator" means an owner, president, officer, or director of an eligible nonprofit scholarship organization or a person with equivalent decision making authority over an eligible nonprofit scholarship organization.
XI. "Parent" means the natural or adoptive parent or legal guardian of a child.
XII. "Program year" means the year beginning July 1 and ending June 30.
XIII. "Receipt" means proof of payment received by a school from a scholarship organization or, in the case of a home educated student, a document that is issued by the parent of a home educated student, to the scholarship organization which makes payment for educational expenses on behalf of an eligible student and that contains, at a minimum and where applicable:
(a) The name and address of a parent of a home educated student.
(b) The name and address of the eligible student for whom the expense has been paid.
(c) The name of the payee and the date and amount of the expense paid.
XIV. "Receiving school" means a public or nonpublic school which the eligible student seeks to attend.
XV. "Release of information form" means a document developed by a receiving school, signed by the parent or guardian of an eligible student, and which acknowledges the consent of the parent or guardian to release of information contained in the receipt.
XVI. "Scholarship impact survey" means a document developed by the department of education and given to the parents of students who have exited a public school under the provisions of RSA 77-G:8. The survey shall solicit the reasons for seeking the scholarship, and any suggested improvements desired in the public school they are leaving.
XVII. "Scholarship organization" means a charitable organization incorporated or qualified to do business in this state that:
(a) Is exempt from federal income taxation pursuant to section 501(c)(3) of the Internal Revenue Code;
(b) Complies with applicable state and federal antidiscrimination and privacy laws;
(c) Is registered with the director of charitable trusts; and
(d) Has been approved by the department of revenue administration for the purpose of issuing scholarships as provided in this chapter.
XVIII. "Scholarship organization application" means a document developed by the department of revenue administration and submitted by a scholarship organization that contains at a minimum:
(a) The scholarship organization's name, address, and federal taxpayer identification number.
(b) A contact person's name, title, and phone number.
(c) A signed statement that the scholarship organization has met the eligibility requirements of paragraph XVII, and will comply with the provisions of this chapter.
XIX. "Scholarship organization report" means a document developed by the department of revenue administration and submitted by a scholarship organization to the department of revenue administration that shall be a public record, notwithstanding RSA 21-J:14, and contains at a minimum:
(a) The number of scholarships granted under subparagraph VIII(a)(1), and the percentage of these students who were eligible for the federal free and reduced-price meal program in the prior year.
(b) The number of scholarships granted under subparagraph VIII(a)(2), and the percentage of these students who were eligible for the federal free and reduced-price meal program in the prior year.
(c) The number of scholarships granted under subparagraph VIII(a)(3), and the percentage of these students who were eligible for the federal free and reduced-price meal program in the prior year.
(d) The total dollar amount of all scholarships granted.
(e) The total dollar amount of donations spent on administrative expenses pursuant to RSA 77-G:5, I(f).
(f) The total dollar amount to be carried forward pursuant to RSA 77-G:5, I(g).
(g) The total dollar amount of donations used and not used for scholarships.
(h) The number of scholarships granted.
(i) The number of scholarships distributed by the organization, per school, and the dollar range of those scholarships. All home educated students shall be totaled together as a single school.
(j) An analysis, broken down by zip code, of the place of residence for each student receiving a scholarship under this program.
(k)(1) The aggregated results from a survey, designed by the department of revenue administration, and administered by the scholarship organization, which shall solicit information from at least 90 percent of the parents or legal guardians of participating students, broken down by the number of years in the program. In each case, the respondent shall be asked to gauge their level of agreement with the statement as follows: "strongly agree," "agree," "no change," "disagree," "strongly disagree." The following statements shall be included in the survey:
(A) I am satisfied with the school my child is attending as compared to the school my child attended prior to the availability of the education tax credit program.
(B) My child has seen a measurable improvement in academic achievement.
(C) My child would have been unable to attend the school of his or her choice without the education tax credit program.
(2) The survey shall include the following question to the parent or legal guardian of a participating student: "Excluding the education tax credit scholarship, how much did you pay out of pocket for your child to attend school this year?"
(l) The aggregated results from a survey, designed by the department of education, and administered by the scholarship organization, which shall solicit and receive information from the parents or legal guardians of participating students who graduated or stopped attending 2 years prior. A parent's or legal guardian's response to the survey shall be optional. Results shall be aggregated by the scholarship organization and published by the department of education. The survey shall solicit the following information:
(1) Whether the student is attending a private, public, community, or vocational college, or otherwise employed or unemployed.
(2) Whether the student graduated or not.
(m) The number of participating students who graduated from high school in the previous year, and the number that dropped out of school.
(n) A signed statement that the scholarship organization acknowledges compliance with the provisions of this chapter.
(o) An explanation of information omitted from the report because it would reveal private data about an individual student.
(p) The name of any other scholarship organizations who have agreed to combine their data with the scholarship organization for the purposes set forth in RSA 77-G:2, II. The agreement shall only be considered valid if each scholarship organization lists the other scholarship organizations in the agreement.
XX. "Scholarship receipt" means a document developed by the department of revenue administration and submitted by a scholarship organization to the business organization, business enterprise, or individual and that contains at a minimum:
(a) The business organization's, business enterprise's, or individual's name, address, and federal taxpayer identification number.
(b) The donation amount and date received or postmarked.
(c) The scholarship organization's name and address.

Source. 2012, 287:4, eff. June 27, 2012. 2016, 8:9, eff. Mar. 16, 2016. 2017, 63:1, 2, eff. Aug. 1, 2017. 2018, 341:1-4, eff. July 1, 2018; 357:1-3, 5, 6, eff. July 1, 2018; 357:15, 17, eff. July 1, 2018 at 12:01 a.m.

Section 77-G:2

    77-G:2 Scholarships. –
I. (a) An eligible student may receive a scholarship to attend (1) a nonpublic school, except when the student has been placed by the local school district through the special education process; (2) a public school located outside of the school district in which the student resides and for which the public school is not eligible to receive an adequate education grant payment for the student in the current fiscal year, in an amount not to exceed the tuition cost of the public or nonpublic school; or (3) the cost of college or university, accredited tutor or tutoring facility, or distance education program. A home education student may also receive a scholarship to cover educational expenses. A student shall not receive a scholarship from more than one scholarship organization.
(b) The average value of all scholarships awarded by a scholarship organization, excluding eligible students who received scholarships for educational expenses related to home education only, shall not exceed $2,500. Beginning in the second year of the program, the commissioner of the department of revenue administration shall annually adjust this amount based on the average change in the Consumer Price Index for All Urban Consumers, Northeast Region, using the "services less medical care services" special aggregate index, as published by the Bureau of Labor Statistics, United States Department of Labor. The average change shall be calculated using the calendar year ending 12 months prior to the beginning of program year. In each of the first and second program years, a scholarship organization shall award a minimum of 70 percent of all scholarships issued to eligible students as defined in RSA 77-G:1, VIII(a)(1) and (2) and, notwithstanding RSA 193-E:5, shall notify the department of education of the unique pupil identifier and date of birth for each of these students granted a scholarship within 30 days following the end of each program year. The required minimum percentage of all scholarships issued by a scholarship organization to eligible students as defined in RSA 77-G:1, VIII(a)(1) and (2) shall be reduced by 5 percent each program year for years 3 through 15 of the program, and, at the beginning of the sixteenth program year and every program year thereafter, there shall be no required minimum percentage of scholarships.
(c) The minimum value of a scholarship granted to a student receiving special education programs or services pursuant to RSA 186-C shall be 175 percent of the maximum average scholarship size as defined in subparagraph (b).
(d) At least 40 percent of the scholarships awarded by the scholarship organization to eligible students as defined in RSA 77-G:1, VIII(a)(1) and (2) shall be awarded to students who qualified for the federal free and reduced-price meal program in the prior year.
(e) A student shall reapply each year for a scholarship.
II. Scholarship organizations may meet the percentage requirements of subparagraphs I(b) and (d) if, pursuant to a mutual agreement, the organizations aggregate their scholarship data and the aggregated data shows compliance with the percentage requirements.

Source. 2012, 287:4, eff. June 27, 2012. 2017, 63:3, eff. Aug. 1, 2017. 2018, 357:7, 8, eff. July 1, 2018.

Section 77-G:3


[RSA 77-G:3 effective until January 1, 2027; see also RSA 77-G:3 set out below.]
    77-G:3 Contributions to Scholarship Organizations. – For each contribution made to a scholarship organization, a business organization, business enterprise, or individual may claim a credit equal to 85 percent of the contribution against the business profits tax due pursuant to RSA 77-A, against the business enterprise tax due pursuant to RSA 77-E, against the tax on interest and dividends under RSA 77, or apportioned against each provided the total credit granted shall not exceed the maximum education tax credit allowed. Credits provided under this chapter shall not be deemed taxes paid for the purposes of RSA 77-A:5, X. The department of revenue administration shall not grant the credit without a scholarship receipt. No business organization, business enterprise, or individual shall direct, assign, or restrict any contribution to a scholarship organization for the use of a particular student or nonpublic school. No business organization, business enterprise, or individual shall receive more than 10 percent of the aggregate amount of tax credits permitted in RSA 77-G:4.

[RSA 77-G:3 effective January 1, 2027; see also RSA 77-G:3 set out above.]


77-G:3 Contributions to Scholarship Organizations. –
For each contribution made to a scholarship organization, a business organization, business enterprise, or individual may claim a credit equal to 85 percent of the contribution against the business profits tax due pursuant to RSA 77-A, against the business enterprise tax due pursuant to RSA 77-E, or apportioned against each provided the total credit granted shall not exceed the maximum education tax credit allowed. Credits provided under this chapter shall not be deemed taxes paid for the purposes of RSA 77-A:5, X. The department of revenue administration shall not grant the credit without a scholarship receipt. No business organization, business enterprise, or individual shall direct, assign, or restrict any contribution to a scholarship organization for the use of a particular student or nonpublic school. No business organization, business enterprise, or individual shall receive more than 10 percent of the aggregate amount of tax credits permitted in RSA 77-G:4.

Source. 2012, 287:4, eff. June 27, 2012. 2018, 341:5, eff. July 1, 2018. 2021, 91:96, eff. Jan. 1, 2027.

Section 77-G:4

    77-G:4 Tax Credits. –
I. The aggregate of tax credits issued by the commissioner of the department of revenue administration to all taxpayers claiming the credit shall not exceed $5,100,000 for a program year.
II. The credit issued to a business organization or business enterprise, or any unused portion thereof, may be carried forward for no more than 5 succeeding years, but shall not exceed $1,000,000 in any given tax year.

Source. 2012, 287:4, eff. June 27, 2012. 2017, 63:9, I, eff. Aug. 1, 2017. 2018, 341:11, eff. July 1, 2018; 357:9, eff. July 1, 2018 at 12:01 a.m.

Section 77-G:5

    77-G:5 Scholarship Organizations. –
I. A scholarship organization shall:
(a) Provide scholarships from eligible contributions to eligible students to defray educational expenses.
(b) Not restrict or reserve scholarships for use at a single nonpublic school and not restrict or reserve a scholarship for a specific student or a specific person.
(c) Verify a student's eligibility to apply for and receive a scholarship through transcripts and attendance records.
(d) Not have an owner or operator who also owns or operates a nonpublic school that participates in the education tax credit program.
(e) Not have an owner or operator who in the last 7 years has filed for personal bankruptcy or corporate bankruptcy in a business organization or business enterprise of which he or she owned more than 20 percent.
(f) Not use more than 10 percent of eligible contributions used during the program year in which the contributions are collected, and for which scholarship receipts were issued for tax credit purposes, for administrative expenses. Administrative expenses shall be reasonable and necessary for the organization's management and distribution of eligible contributions pursuant to this chapter.
(g) In the first program year, there shall be no carry forward of unused eligible contributions. In each program year thereafter, contributions may be carried forward to the following program year.
(h) Maintain separate accounts for scholarship funds, non-tax credit donations, and operating funds.
(i)(1) Not award a scholarship to any lineal descendent or equivalent step-person of any officer, director, or employee of any scholarship organization; and

[Paragraph I(i)(2) effective until January 1, 2027; see also paragraph I(i)(2) set out below.]


(2) Not knowingly award a scholarship to any lineal descendant or equivalent step-person of any proprietor, partner, or member of any business organization, business enterprise, or individual making a contribution to a scholarship organization and claiming a credit against the business profits tax, business enterprise tax, or tax on interest and dividends, nor any lineal descendant or equivalent step-person of any officer, director, or owner of more than a 5 percent interest in any business organization, business enterprise, or individual making a contribution to a scholarship organization and claiming a credit against the business profits tax, business enterprise tax, or tax on interest and dividends, nor any employee who is among the highest-paid 20 percent of paid employees in any business organization, business enterprise, or individual making a contribution to a scholarship organization and claiming a credit against the business profits tax, business enterprise tax, or tax on interest and dividends.

[Paragraph I(i)(2) effective January 1, 2027; see also paragraph I(i)(2) set out above.]


(2) Not knowingly award a scholarship to any lineal descendant or equivalent step-person of any proprietor, partner, or member of any business organization, business enterprise, or individual making a contribution to a scholarship organization and claiming a credit against the business profits tax or business enterprise tax, nor any lineal descendant or equivalent step-person of any officer, director, or owner of more than a 5 percent interest in any business organization, business enterprise, or individual making a contribution to a scholarship organization and claiming a credit against the business profits tax or business enterprise tax, nor any employee who is among the highest-paid 20 percent of paid employees in any business organization, business enterprise, or individual making a contribution to a scholarship organization and claiming a credit against the business profits tax or business enterprise tax.
(j) Provide to each school district which receives a stabilization grant pursuant to RSA 77-G:8 a copy of the aggregated results of the scholarship impact survey, including total number of students who received scholarships from that school district under RSA 77-G:1, VIII(a)(1).
II. (a) An organization seeking approval as a scholarship organization under this chapter shall submit an application to the department of revenue administration each program year no later than June 15. The department of revenue administration shall approve or deny the application within 30 days of receipt of the application or the scholarship organization report, whichever is later. The department shall deny any application that fails to meet the statutory requirements and shall notify the scholarship organization of the reasons for denial.
(b) A business organization, business enterprise, or individual shall submit an education tax credit application to the department of revenue administration no later than May 31 of each program year. Applications received after May 31 shall be processed for the following program year and approved within 30 days of receipt or within 30 days of the department of revenue administration's approval of the scholarship organization, whichever comes later. Applications shall be processed on a first come-first served basis, up to the aggregate tax credit amount allowed under RSA 77-G:4. If multiple education tax credit applications are received on the same day, they shall be processed at random. No business organization, business enterprise, or individual shall be granted an education tax credit for more than 10 percent of the aggregate tax credit amount permitted in RSA 77-G:4. The department of revenue administration may approve only a portion of a request if required to prevent exceeding the aggregate tax credit amount allowed under RSA 77-G:4. The approval shall include the amount allowed and the date of approval.
(c) Once an education tax credit application is approved, the business organization, business enterprise, or individual shall donate no later than 60 days after the date of approval, and no later than June 30 of the program year during which its application was approved or the request shall expire. Donations may be made to multiple scholarship organizations provided the total amount donated by the business organization, business enterprise, or individual does not exceed the amount approved.
(d) Upon receiving a donation, the scholarship organization shall send a scholarship receipt to the department of revenue administration and to the business organization, business enterprise, or individual within 15 days. The department of revenue administration shall notify the scholarship organization and the business organization, business enterprise, or individual within 15 days if the donations made exceed the amount approved. If a business organization, business enterprise, or individual fails to donate the total amount approved within the time permitted, the department of revenue administration may grant credit requests in the order specified in subparagraph (b).
(e) Notwithstanding RSA 193-E:5, within 30 days following the end of each program year, a scholarship organization shall furnish the unique pupil identifier and date of birth for each student eligible pursuant to RSA 77-G:1, VIII(a)(1) and (2) who received a scholarship, and the subparagraph under which he or she was eligible, to the department of education. The department of education shall notify the scholarship organization within 30 days of any students who are ineligible under RSA 77-G:1, VIII(a)(1).
(f) [Repealed.]
(g) Within 30 days following the end of each program year, the scholarship organization shall submit a scholarship organization report to the department of revenue administration for the most recently completed program year. The scholarship organization shall also include a scholarship organization application if it intends to issue scholarships under this chapter in the next program year. The department of revenue administration shall review the scholarship organization report and the scholarship receipts to ensure that the administrative expenses requirement set forth in subparagraph I(f) is not exceeded, that the number of scholarships issued under RSA 77-G:1, VIII(a)(1) and (2) meets the requirements of this chapter, and the average scholarship size does not exceed the amount allowed. If any of these requirements are not met, the department of revenue administration may deny a scholarship organization application for subsequent program years and shall notify the scholarship organization of the reasons for denial.
(h) A business organization, business enterprise, or individual may file for the tax credit after receiving the scholarship receipt, and may file a tax credit request for the subsequent program year up to the amount donated in the current program year.
(i) The provisions of this chapter regarding nonpublic schools and their relation to scholarship organizations shall apply only to nonpublic schools that choose to accept scholarship students.

Source. 2012, 287:4, eff. June 27, 2012. 2016, 8:10, eff. Mar. 16, 2016. 2017, 63:4, 5, 9, II, eff. Aug. 1, 2017. 2018, 341:6, 7, eff. July 1, 2018; 357:10, eff. July 1, 2018; 357:13, 18, 19, eff. July 1, 2018 at 12:01 a.m. 2021, 91:97, eff. Jan. 1, 2027.

Section 77-G:6

    77-G:6 Department of Revenue Administration; Requirements. –
I. The department of revenue administration shall:
(a) Develop, and annually verify and update, by February 1, a list of eligible nonprofit scholarship funding organizations that meet the requirements of this chapter. The department shall post this list on the department's Internet website and update the list monthly. The department shall forward the list and any updates to the commissioner of the department of education who shall post the list on the department of education's Internet website.
(b) Conduct or require audits in response to any reasonable complaints made. The cost of an independent audit shall be paid by the scholarship organization, but this cost shall be excluded from the administrative expenses requirement set forth in RSA 77-G:5, I(f).
(c) Establish a process by which individuals may notify the department of revenue administration of any violation by a parent, business organization, business enterprise, scholarship organization, or nonpublic school of state laws relating to program participation. The department of revenue administration shall conduct an inquiry of any written complaint of a violation of this chapter, or make a referral to the appropriate agency for an investigation, if the complaint is signed by the complainant and is legally sufficient. A complaint is legally sufficient if it contains facts demonstrating a violation of this chapter or any rule adopted pursuant to this chapter. In order to determine legal sufficiency, the department of revenue administration may require supporting information or documentation from the complainant.
(d) Create, maintain, and post online the relevant forms and reports, and submit scholarship organization reports to the members of the house and senate education committees and to the department of education.
(e) Post to the department's website an up-to-date total of the amount of credits available.
(f) No later than January 1, 2013, adopt rules pursuant to RSA 541-A, relative to:
(1) The application procedure for a scholarship organization applying to accept scholarship donations under this chapter.
(2) The application procedure for a business organization, business enterprise, or individual applying to a scholarship organization for a tax credit under this chapter.
(3) Complaint procedures, including the filing of a complaint and investigations of complaints.
(4) The design and content of the forms and applications required to be filed with, or issued by, the department of revenue administration under this chapter.

Source. 2012, 287:4, eff. June 27, 2012. 2017, 63:6, eff. Aug. 1, 2017. 2018, 341:8, eff. July 1, 2018.

Section 77-G:7

    77-G:7 Department of Education; Requirements. –
I. The department of education shall determine the number of students receiving a scholarship under RSA 77-G:1, VIII(a)(1) and (2) who were counted in the calculation of the average daily membership in attendance, as defined in RSA 198:38, I, for schools, other than chartered public schools, for the student's school district of residence and for each such student, shall deduct the amount calculated under RSA 198:40-a from the total education grant amount disbursed to the student's school district of residence calculated pursuant to RSA 198:40-a. This adjustment shall be completed prior to September 1 of the program year after which the scholarships are granted.
II. The department of education shall verify a student's eligibility under RSA 77-G:1, VIII(a)(1) upon request of a scholarship organization. The department of education shall assist the department of revenue administration, upon request, in the investigation of student eligibility complaints.
III. The state board of education shall adopt rules, pursuant to RSA 541-A, relative to forms necessary for any surveys required and the procedures for determining and disbursing stabilization grants.

Source. 2012, 287:4, eff. June 27, 2012. 2016, 8:11, eff. Mar. 16, 2016. 2018, 357:14, eff. July 1, 2018.

Section 77-G:8

    77-G:8 Scholarship Stabilization Grant. –
I. For each school district, the department of education shall calculate the combined amount of reductions in adequacy cost pursuant to RSA 77-G:7 from students receiving scholarships under RSA 77-G:1, VIII(a)(1) and who were in attendance in that district in the year prior to receiving the scholarships. If this combined amount is greater than 1/4 of one percent of a school district's total voted appropriations for the year prior to the scholarship year, the commissioner of the department of education shall disburse a scholarship stabilization grant for the current and next 3 fiscal years to each such school district equal to the amount of the reductions in excess of 1/4 of one percent. This scholarship stabilization grant shall be included in the September 1 disbursement required pursuant to RSA 198:42.
II. The department of education shall order any scholarship organizations that provided scholarships to students from districts that were awarded stabilization grants pursuant to paragraph I to conduct a scholarship impact survey. The organization shall forward the results of this survey to the department of education and the school board of each district. The department of education shall post the results of this survey online.

Source. 2012, 287:4, eff. June 27, 2012.

Section 77-G:9

    77-G:9 Exceptions. –
I. A receiving nonpublic school or home education program that accepts students benefiting from scholarships, grants, or tax credits shall not be considered an agent of the state or federal government as a result of participating in the program established in this chapter.
II. Except as provided in this chapter, or otherwise provided in law, no state department, agency, or board shall regulate the educational program of a receiving nonpublic school or home education program that accepts students pursuant to this chapter.
III. Donations made by a business organization, business enterprise, or individual to a scholarship organization that are not for the purpose of obtaining a tax credit under this chapter shall not be subject to the requirements in this chapter.

Source. 2012, 287:4, eff. June 27, 2012. 2018, 341:9, eff. July 1, 2018.

Section 77-G:10

    77-G:10 Severability. – If any provision of this chapter or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the chapter which can be given effect without the invalid provision or application, and to this end the provisions of this chapter are declared to be severable.

Source. 2012, 287:4, eff. June 27, 2012.