New Hampshire Business Tax Credit Scholarship Program

Duncan v. State of New Hampshire
Institute for Justice, New Hampshire Parents, and the Network for Educational Choice Defend School Choice in the Granite State

New Hampshire School Choice
IJ clients Miguel and Shalimar Encarnacion, with son Miguel and daughter Angelica.

On February 22, 2013, the Institute for Justice successfully intervened in a state court lawsuit challenging New Hampshire’s Business Tax Credit Scholarship Program. IJ seeks to defend the program on behalf of parents and the Network for Educational Opportunity (“NEO”), a nonprofit scholarship granting organization that raises money under the program and awards scholarships to low-income families. The lawsuit was filed by several New Hampshire taxpayers represented by Americans United for Separation of Church and State, and the American Civil Liberties Union and its state affiliate.

New Hampshire’s Business Tax Credit Scholarship Program offers local businesses a partial tax credit (85 percent) for voluntary donations made to private, nonprofit scholarship organizations that fund education scholarships to low-income families. Qualifying parents may choose to send their children to tuition-charging public schools in neighboring school districts, or to home school their children, or to pay for tuition at any of the state’s private or religious schools. The lawsuit claims that the tax credit program violates two of the New Hampshire Constitution’s religion clauses by allegedly using money raised by taxation to compel taxpayers to support religious schools.

But education tax credit programs do not violate state constitutional provisions that prohibit state funds from directly aiding religious schools because tax credit programs rely entirely on private funds, private organizations, and private decision makers. Private individuals set up scholarship organizations. Private businesses donate to scholarship organizations. And parents decide whether to apply for a scholarship and which schools to enroll their children into best meet their unique educational needs.

One of the parents that IJ represents, Shalimar Encarnacion, exemplifies how desperately New Hampshire families need educational choice. She has applied to NEO on behalf of her two children, 14-year-old Angelica and 10-year-old Miguel. Angelica is a cancer survivor whose cognitive abilities are still adversely affected by the extensive chemotherapy she underwent. Miguel has ADHD and is often isolated by his current public school teacher as a means of discipline rather than redirected and given positive reinforcement. Both of Shalimar’s children need smaller class sizes and more individual attention—something that Shalimar believes she has found in a nearby Christian school. Unfortunately, Shalimar and her husband cannot afford the tuition absent financial assistance of the sort that NEO plans to provide to families like the Encarnacions.

IJ is the nation’s leading legal advocate for educational choice and has represented parents and children in defense of school choice programs nationwide for more than 20 years. Significantly, IJ successfully defended tax-credit-funded scholarship programs that are similar to New Hampshire’s in Arizona and Illinois.


Essential Background


Backgrounder: none available

Client Photo - none available

Client Video - none available

Latest Release: New Hampshire Supreme Court Upholds State’s School Choice Program (August 28, 2014)

Legal Briefs and Decisions

Order: Strafford Superior Court (June 17, 2013)

Launch Release: IJ Seeks to Defend New Hampshire School Choice Program (January 29, 2013)

Opinion: New Hampshire Supreme Court (August 28, 2014)

Case Timeline

School Choice Opponents Filed Lawsuit:


January 9, 2013

Court Filed:


Strafford County Superior Court

Current Court:

Strafford County Superior Court

IJ Intervention Filed: February 11, 2013



Next hearing date: April 26, 2013

Additional Releases

Maps, Charts and Facts

Release: NH Trial Court in School Choice Case Favors Nonreligious Schools over Religious Ones; Court Ignores That the Program’s Funds are Private Contributions, Not Government Funds (June 17, 2013)

Article: NH Supreme Court upholds education tax credit law Associated Press (August 28, 2014)


Article: Manchester family has private school dreams The Telegraph (March 5, 2013)


Op-eds, News Articles & Links 


Article: New Hampshire Supreme Court Rules for School Choice Watchdog News Networks (September 4, 2014)

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