One of the oldest and more popular forms of school choice in the United States is educational tax credits. Like many other types of school choice, educational tax credits enable parents to send their children to the K-12 school of their choice, public or private, religious or non-religious. One type of educational tax credits, tax-credit scholarships, give individuals and corporations an incentive--reduced income taxes--to donate to non-profit organizations that provide scholarships to families. These scholarships bring a wider array of educational options within the financial reach of low- and moderate-income families. In Indiana, legislation that would have created such a program, allowing for individuals and corporations to donate up to $30 million per year, died in committee in 2002. The initiative would have expanded educational options for children from low-income families by allowing them to use the funds (up to $3,300 per student) to choose between public and private schools. Three more bills that would have created similar, smaller programs failed to become law in 2003. Leaders of the public school establishment frequently charge that such scholarship tax credit programs are risky and unprecedented public policy. As this report shows, however, using tax credits to enable Indiana students--particularly low-income ones--to attend the school of their choice is neither risky nor unprecedented. Indeed, Indiana policymakers already use tax credits to help the poor enter the workforce, purchase homes, attend college and accumulate savings. And Indiana already operates a similar, successful program for college students. The Twenty-First Century Scholars Program grants scholarships to foster children and low income students that they can use at both public and private colleges and universities, including religious schools. Individuals and corporations can receive tax credits for donations to a fund supporting the program. This report concludes that a well-designed scholarship tax credit program would build on successful Indiana policy and can provide a broader range of educational options to Indiana families in K-12 education. (Contains 5 tables and 32 endnotes.)