The 2012 tuition tax credit law allows companies that contribute to a scholarship program (NEO) created to subsidize a qualifying student’s education in a private school, whether secular, sectarian, public school outside of the student’s district, or at home, to deduct 85 percent of the donation from money they would otherwise owe the state in business profit taxes, (the business profits tax and/or the business enterprise tax).

Vouchers Explained lists the 11 step process.


Article 83 of he NH Constitution states that “no money raised by taxation shall ever be granted or applied for the use of the schools of institutions of any religious sect or denomination.”

Supporters of the law say:

    • Low-income people who send their children to private schools  get scholarships that help them pay for tuition.  (Actually, scholarships are  available to families above “low income” level, up to $70,000 for a family of four.)

Opponents of the law say:

    • The law violates the N.H. Constitution by giving public tax money to private and religious schools, contrary to the principle of separating church and state.  (For that reason, the law is under court challenge by Americans United for Separation of Church and State and the American Civil Liberties Union.)
    • Money is diverted from public schools. (When a child leaves a public school, the state adequacy grant of $4,100 leaves the district).
    • Unlike public schools, the private schools given this money aren’t accountable to taxpayers for their performance.
    • Although private schools take public tax money from everyone, they accept only the students they want, unlike public schools which must accept all students, including those with special needs.
    • There is a lack of oversight and accountability for the scholarship fund which is managed by a group from California.


    • In 2012, the state legislature adopted the tax credit over the veto of then-Democratic Gov. John Lynch.
    • The law went into effect in January of 2013, allowing up to $3.5 million of tax credits in the first year and $5.1 million in the second.
    • In 2013, the House voted to repeal the law, however the Senate Committee on Health, Education, and Social Services disagreed.  The full senate later voted to table the bill.
    • As of April, 2013,  only $140,000 of the projected $4 million dollars had been raised.
    • By June it was claimed that $250,000 in donations for scholarships had been raised and about 1,000 applications for the money had been made by local families.
    • In January, 2013, the law was challenged in the Strafford County Superior Court by nine New Hampshire parents, taxpayers and a business.  Their case was waged by the New Hampshire Civil Liberties Union, Americans United for Separation of Church and State and a dozen other opponents of the tax credit program. They claimed the tax credit violates the state constitution by giving public money to religious schools.
    • In June 2013, the judge ruled that the state’s education tax credit program could not provide scholarships to students to attend religious schools, calling that portion of the program unconstitutional.  The decision, while ruling scholarships to religious schools unconstitutional, does not dismantle the tax credit program entirely, allowing scholarships to be used at nonreligious private schools, out-of-district public schools and home-school programs.
    • The NH Supreme Court heard an appeal of the case in April of 2014, allowing the business education tax credit to remain intact.  The justices said the challengers had suffered no injury and therefore had no right to sue.  They declared unconstitutional a 2012 amendment to state law that permits taxpayers to sue even if they can’t show their rights were violated.
    • The justices’ position on standing eliminated their need to rule on the constitutionality of the law.


  •  According to a New Hampshire Department of Education response to a right-to-know request from Americans United for the Separation of Church and State, a July 15, 2013 report on the voucher program says that no more than 15 public school students will receive scholarships in the first year of the program.  Since 70% of the scholarships must go to public school students, by ANHPE (Advancing New Hampshire Public Education) calculation, the maximum number of students receiving scholarships in 2013/14 will be 21.
  • The Network for Educational Opportunity, the first scholarship organization in the state that took advantage of the 2012 law, reports that the Supreme Court ruling means there’s $5 million in business tax credits now available.

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