Rhode Island Tax Credit Scholarship Program for Businesses

Rhode Island's scholarship credit, in brief

Rhode Island has offered a scholarship tax credit since 2006, under chapter 44-62 of the General Laws. It's a small, business-only program. A business entity gives cash to a qualified scholarship organization and earns a credit against Rhode Island business taxes. The organizations then fund private school scholarships for lower-income Rhode Island students.

If you're an individual, this credit isn't for you. Your option is the new federal scholarship tax credit, which you can use even though Rhode Island hasn't opted in.

Who can claim it

"Business entities" authorized to do business in Rhode Island and subject to taxes under chapters 44-11, 44-13, 44-14, 44-15 and 44-17. That includes corporations, S corporations, limited liability partnerships and LLCs. The credit applies only to the specific corporation that qualifies, not to other members of a consolidated return.

Amounts and caps

If the second-year gift under a two-year plan falls short but is at least 80% of the first year's gift, both years still earn 90%. Below 80%, both years drop to 75%, and the Division adjusts the second-year certificate.

To qualify, a scholarship organization must be a Rhode Island 501(c)(3) that gives at least 90% of its annual revenue as scholarships. It must certify each year by December 31. Scholarships go to students at qualified nonpublic schools in Rhode Island from households at or below 250% of the federal poverty guidelines.

Preapproval and deadlines

Rhode Island requires approval before the gift:

1. Apply in writing to the Division of Taxation before contributing. The application names the scholarship organization and the credit amount, up to $100,000.
2. Get a decision within 30 days. Approvals are first come, first served against the $1.6 million cap.
3. Give within 120 days of approval, in cash. For a two-year plan, the second gift is due by the same date the following year.
4. Apply for the credit certificate. Include certification from an independent Rhode Island CPA, one not affiliated with your business or the scholarship organization, that the gift was made.
5. Use the credit against that year's tax.

With only $1.6 million available statewide, apply early in the state fiscal year, which starts July 1.

How it stacks with the federal $1,700 credit

Today, it doesn't. Three reasons:

• Rhode Island hasn't opted in. It isn't on the IRS advance-election list (September 14, 2026). Rhode Island's H 7163, signed June 18, 2026, requires the legislature and governor to approve any opt-in through a signed bill.
• Different donors. Rhode Island's credit is for businesses. The federal credit is for individuals. Under Treasury's proposed rules, a gift made through a partnership or S corporation doesn't count for the owners' federal credit.
• Different organizations. A Rhode Island scholarship organization can't be a federal SGO unless Rhode Island opts in and lists it.

Worked example. Kate owns a Rhode Island S corporation and also pays federal income tax personally.

• In fiscal 2027, her company applies, is approved and gives $40,000 to a qualified scholarship organization under a two-year plan. The company earns a $36,000 Rhode Island credit (90%).
• In 2027, Kate personally gives $1,700 in cash to an SGO on the IRS SGO list in a state that opted in, and designates it as a qualified contribution. She claims a $1,700 federal credit. Her husband can do the same for another $1,700.

The Rhode Island credit doesn't reduce Kate's federal credit, because it isn't a credit for a federal qualified contribution. Her federal gift will fund students in the other state, not in Rhode Island.

How to give, step by step

For a business (state credit): pick a qualified organization from the Division of Taxation's annual list. Apply before you give, give within 120 days, get the CPA certification and claim the certificate. See how Rhode Island compares with Pennsylvania, Florida and others in our guide to business tax credit scholarships.

For an individual (federal credit): from January 1, 2027, choose an SGO listed by any opted-in state. Give up to $1,700 per spouse in cash, designate it as a qualified contribution and keep the acknowledgement with your donor number. Our guide to claiming the federal scholarship tax credit covers Form 8525.

Choosing where to give

For the state credit, start with qualified organizations such as F.A.C.E. of Rhode Island, and ask them how many students they serve, which schools participate and how they meet the 90% rule. For the federal credit, use our checklist for choosing a scholarship fund. Families can see what's available on Rhode Island scholarships.

Edulist never handles donations. You give directly to the organization. Pledge on Edulist and we'll remind you when federal giving opens and if Rhode Island's status changes. This page reflects Rhode Island law and Treasury's proposed rules as of October 13, 2026. It is not tax advice; ask your tax professional.