The Arkansas House and Senate Education Committees, meeting jointly on August 4, approved Interim Study Proposal 2025-089, requesting the House Committee on Education to study the creation of a personal education tax credit program. The proposal, submitted by Rep. Brit McKenzie, R-Rogers, calls for a refundable credit of up to $3,000 per child for expenses including tuition, fees, textbooks, curriculum materials, tutoring, educational therapies, transportation, and technology.
The proposed program would begin in 2027 with an annual cap of $100 million and expand to uncapped universal availability by 2029. Rep. McKenzie said the credit would serve families who find the state's existing Educational Freedom Account program's regulatory requirements burdensome, particularly homeschool families. No bill has been drafted; the study would gather input from state agencies, parent advocacy groups, and states with similar programs.
Layered on a growing EFA program
Arkansas' existing EFA program, created by the 2023 LEARNS Act, served 14,256 active students in 2024-25, a 157 percent increase from its first year. Total EFA spending reached $93.8 million, with each account providing $6,856 per student. The program enters its first year of universal eligibility in 2025-26, with costs projected at $277 million. The study proposal explicitly calls for examining the interaction between the proposed tax credit and the EFA program, along with the Philanthropic Investment in Arkansas Kids Program, to ensure complementary rather than duplicative benefits.
According to the 2024-25 EFA annual report from the Arkansas Department of Education and the University of Arkansas Department of Education Reform, private school tuition and fees accounted for 81 percent of EFA spending ($68.3 million), while homeschool-related uses such as curriculum and tuition made up 8 percent. The report also calculated switcher savings of $12.2 million to $22 million, reducing the net state cost to between $71.8 million and $81.6 million.
Models from other states
The study proposal cites Oklahoma and Idaho as models. Oklahoma enacted the Parental Choice Tax Credit Act in 2023, effective for tax year 2024. That program offers a refundable income tax credit of $5,000 to $7,500 per private-school student, tiered by household income, and a $1,000 credit for homeschool students. The annual cap was increased to $275 million for the 2026-27 school year. Oklahoma's credit for private-school students is larger than the $3,000 flat amount Arkansas is studying, and it uses income tiers rather than a uniform figure. The Oklahoma Tax Commission administers applications and gives first preference to lower-income applicants. The Arkansas study proposal did not provide details on Idaho's program parameters but listed it among eleven states with similar tax credit programs.
Fiscal and parental satisfaction evidence
The 2024-25 EFA annual report found that parent satisfaction averaged 4.3 out of 5 for Arkansas Department of Education administration and 4.0 for the ClassWallet platform. The report did not assess academic outcomes with controlled comparisons, and its fiscal savings estimates depend on assumptions about which students would have attended public schools absent the program. The report noted that the EFA program accounted for 2.6 percent of the state's K-12 budget while serving 3 percent of students in 2024-25, but projects costs will rise to 7.4 percent of the K-12 budget in 2025-26. The study proposal will explore fiscal impact analysis comparing the proposed tax credit to existing state-funded education programs, as well as implementation timeline and phase-in strategies.