The Iowa Alliance for Choice in Education (Iowa ACE) was formed in 2005 as an umbrella organization for Iowa’s non-public schools. Among its priority issues was ensuring the creation and support of student tuition organizations (STOs). Through legislation passed in 2005, money donated to STOs makes donors eligible for a tax credit of 65% of the amount of their gift. In 2009, the cap for this tax credit is $7.5 million.
Former Governor Tom Vilsack signed the Educational Opportunities Act into law in 2006. This legislation allows individual Iowa taxpayers to receive a tax credit equal to 65% of the total amount of voluntary cash contributions donated to an STO. STOs allocate those funds as tuition grants to Iowa students to assist them in attending an accredited nonpublic school.