Topline
The Treasury Department and IRS published rules Thursday for a federal program that allows taxpayers to claim dollar-for-dollar tax credits when they donate to K-12 scholarship organizations.
WASHINGTON, DC – MAY 18: A Department of Education sign is displayed outside of their federal student aid office on May 18, 2025 in Washington, D.C.
Photo by Kevin Carter/Getty Images
Key Facts
Under the school choice program, individual taxpayers can claim a nonrefundable credit of up to $1,700 for qualifying cash contributions to scholarship-granting organizations.
The credit increases to up to $3,400 for married couples filing jointly, and unused credits can be carried forward for up to five years.
Taxpayers in all states can contribute to eligible organizations and can use the IRS scholarship-granting organization list when planning contributions, according to the Treasury Department.
The program will launch at the start of 2027, with states required to submit a qualified organization list by Feb. 15.
Big Number
$26 billion. That is the annual qualified contributions the Treasury Department and IRS estimate more than 11 million taxpayers will make to the program by 2030, funding as many as 2.2 million scholarships per year.
Key Background
Trump’s “Big Beautiful Bill” created the Education Freedom Tax Credit at the heart of the school choice program. Thirty-one states, most of which are Republican-led and concentrated in the South, have agreed to participate in the tax credit, according to Ballotpedia. Democratic governors in states including Hawaii, Minnesota, New Mexico and Oregon have rejected the tax credit, taking issue with using taxpayer incentives to fund private schooling. Critics have warned the program could divert taxpayer money away from underfunded public schools. The Trump administration has accused public schools of “indoctrinating” children and teaching “anti-American ideologies.”
Further Reading
Federal School Vouchers Offer Little Flexibility For States (Forbes)
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