The bill amends the Income Tax Act of 1967 by adding a new section, Sec. 281, which introduces a tax credit for taxpayers starting from tax years that begin on or after January 1, 2026. This credit is set at 50% of the target foundation allowance specified in the state school aid act for the school year ending during the tax year in which the credit is claimed. Taxpayers can claim this credit for each qualified dependent for whom they have claimed an exemption. The Department of Treasury may require proof that the dependent qualifies under the new criteria.

To qualify as a "qualified dependent," the individual must be between the ages of 5 and 19, not enrolled in a public school for the relevant school year, and must demonstrate proficiency in reading and math appropriate for their grade level through various assessments. Additionally, if the credit exceeds the taxpayer's tax liability, the excess amount will be refunded. This bill aims to provide financial relief to families with dependents who are not enrolled in public schools while encouraging educational proficiency.

Statutes affected:
Senate Introduced Bill: 206.1, 206.847