Arkansas Philanthropic Investment in Arkansas Kids Tax Credit and the Federal Credit

How the Arkansas PIAK credit works

Act 904 of 2021 created the Philanthropic Investment in Arkansas Kids Program (Ark. Code 6-18-2201). It funds scholarships for eligible students to attend private schools. Donors get an Arkansas income tax credit equal to 100% of their contribution to an approved scholarship granting organization (SGO).

The Division of Elementary and Secondary Education tracks the scholarship grants and reports on the program each year.

Who can claim it

DFA's application form lists four donor types: individual, LLC, partnership and corporation. If an LLC or partnership gives, it attaches the names, tax IDs and ownership percentages of its members, so the credit can flow to them. Gifts must be cash, check or electronic funds transfer.

The cap and how to get a certificate

There's no preapproval before you give. The process runs after the gift:

1. You give to an approved SGO.
2. You and an SGO official sign DFA's Tax Credit Application and Receipt of Eligible Contribution. You can also consent to DFA telling the SGO how much credit you were granted.
3. The SGO emails the form to DFA's Tax Credits/Special Refunds section.
4. DFA issues a Certificate of Tax Credit in the order applications arrive, until that year's cap is used up.
5. You attach a copy of the certificate to your Arkansas return.

Because credits are first come, first served, give earlier in the year if you're counting on one, and ask your SGO how much of the year's cap is left. DFA hadn't posted a current remaining balance as of October 2026.

How the Arkansas credit stacks with the federal $1,700 credit

Arkansas opted in to the federal scholarship tax credit in January 2026 and is on the IRS list of 2027 advance elections. From January 1, 2027, Arkansas taxpayers can also claim up to $1,700 per person in federal credit for gifts to SGOs on the IRS SGO list.

Here's the catch. Under Treasury's proposed rules (October 2, 2026), any state credit allowed for your qualified contributions is subtracted before the $1,700 cap. Because PIAK credits 100%, claiming PIAK on the same dollars wipes out the federal credit:

The proposed rules also have an ordering rule. If you get a state credit on a mix of designated and undesignated gifts, the state credit is applied first to the undesignated part. Keeping the federal gift separate, and not requesting a PIAK certificate for it, is the cleanest way to show your federal qualified contribution wasn't state-credited. Treasury's rules aren't final, so run your plan past a tax professional.

Worked example

Lena owes $2,500 in Arkansas income tax and at least $1,700 in federal tax. In 2027 she:

• gives $2,500 to an approved SGO for PIAK, doesn't designate it as a federal qualified contribution, and gets a $2,500 PIAK certificate
• gives $1,700 to an SGO on the IRS list, designates it as a qualified contribution, and doesn't request a PIAK certificate for it

Result: $2,500 off her Arkansas tax and $1,700 off her federal tax, $4,200 in credits on $4,200 of gifts. A married couple can repeat the federal piece for each spouse.

Business gifts

A corporation, LLC or partnership can earn PIAK credits, but under the proposed rules entity gifts never earn the federal credit for the owners. Owners who want the federal credit should give personally.

How to give in Arkansas, step by step

1. Pledge on Edulist so we can remind you when federal giving opens on January 1, 2027.
2. Choose your SGO(s). For PIAK, an SGO approved by the state. For the federal credit, an SGO on the IRS SGO list, in Arkansas or any other covered state.
3. Decide the split between a PIAK gift and a federal gift, based on your Arkansas and federal tax.
4. Give and complete the paperwork: the DFA application for PIAK; a qualified-contribution designation for the federal gift.
5. Keep records: the DFA Certificate of Tax Credit, and the SGO's federal acknowledgement with your unique donor number (due by January 31).
6. File. Attach the certificate to your Arkansas return, and file Form 8525 with your federal return. Our guide to claiming the federal scholarship tax credit has the details.

Choosing an Arkansas SGO

ACE Scholarships, a Colorado-based nonprofit, lists Arkansas among the states where taxpayers can direct state tax liability to its scholarships. DFA doesn't publish an SGO list on its credit page, so ask any SGO to confirm it's approved for PIAK and, from 2027, listed on the IRS SGO list. Our checklist for choosing a scholarship fund covers what else to ask. Families should also see Arkansas's state-funded Education Freedom Account and Arkansas scholarships. Businesses comparing states can read business tax credit scholarships.

For the federal rules, see the federal scholarship tax credit explained and the states opted in tracker.

Edulist doesn't take donations. You give directly to the SGO. This page reflects Arkansas DFA guidance and Treasury's proposed federal rules as of October 13, 2026. It is not tax advice. Ask your tax professional.