US Treasury advances federal school choice tax credit

The Trump administration has advanced the nation’s first federal school-choice tax credit, known as the Education Freedom Tax Credit. The Treasury Department and the IRS issued proposed and temporary regulations on October 1 to outline participation for states, taxpayers, and scholarship organizations. The program is scheduled to launch on January 1, 2027.

Under the program, taxpayers can claim a nonrefundable federal income-tax credit for qualifying cash donations to Scholarship Granting Organizations (SGOs) that provide K-12 scholarships. Individuals are eligible to claim up to $1,700, while married couples filing jointly can claim up to $3,400. Beyond private school tuition, funds may support tutoring, books, supplies, extended-day programs, and services for students with disabilities.

Thirty states have already opted into the program, including Florida, Texas, Ohio, and Colorado. Education Secretary Linda McMahon described the initiative as “the largest expansion of school choice in history,” while Treasury Secretary Scott Bessent stated the credit creates “a new chapter in educational freedom and opportunity.” The proposal is currently in a public comment period, with comments accepted until December 1, 2026.