NATIONAL SCHOOL CHOICE – American Federation for Children
The federal tax credit scholarship legislation in H.R.1 – One Big Beautiful Bill Act represents the most ambitious school choice advancement in our nation’s history, aimed at expanding educational opportunities in all 50 states.
Congress included this critical school choice provision in the OBBA and on July 4, President Trump signed into law a national school choice tax credit!
The OBBA includes a 100% non-refundable federal tax credit that is permanent and uncapped.
Individual taxpayers who contribute up to $1700 to a non-profit scholarship granting organization can claim the credit.
A taxpayer cannot claim the federal tax credit and a federal charitable contribution for the same donation.
The amount allowed as a federal credit shall be reduced by the amount allowed as a State credit on any State tax return of the taxpayer. In a state with an existing scholarship tax credit program where a taxpayer receives a 100 percent non-refundable state credit, the taxpayer must make a separate contribution to receive the federal credit.
Contributions to scholarship granting organizations must be cash contributions.
States must “opt-in” for scholarship granting organizations who operate in the state to participate. Authority to opt-in is a Governor or individual agency or entity that is designated under state law to make this election on behalf of the state.
Student eligibility is 300 percent of median gross income by area, which covers approximately 90 percent of the K-12 students in every state. Student must be eligible to enroll in a public elementary or secondary school.
A state that elects to participate shall annually submit a list to the Secretary of the Treasury of scholarship granting organizations that meet the requirements outlined in the federal law.
SGO requirements:
The U.S. Treasury Department will issue rules for implementation of the law prior to its January 1, 2027 effective date.
Key Facts
Why do we need it?
School choice has made historic progress across more states than ever, but too many families are still locked out of opportunity. We need school choice in every state.
Tommy Schultz, CEO, American Federation for Children, after the historic expansion for school choice:
“Every state will have school choice soon. For a generation, our movement has fought to give all families, especially lower-income families, the freedom to choose the best K-12 education for their sons and daughters, and now President Trump has signed into law the single biggest advancement of that goal.
For far too long, the schooling unions and their allies have stood in the schoolhouse door blocking equal access to school choice. Their time of dominating America’s education system is over. This historic tax credit will supercharge school choice across America. We applaud President Donald Trump and champions in Congress for ensuring this generational expansion of educational freedom was a priority during the reconciliation process.
AFC will work to ensure that governors and state leaders listen to their constituents and bring educational freedom to every state in the nation, and to as many families as possible. We will continue to fight to ensure that this tax credit scholarship is well-implemented and expanded as soon as possible.”
How Does School Choice Help Students?
When publicly supported scholarships are accessible to students to use at the school of their choice, families win. All parents should have a wide range of high-quality educational options to choose from, regardless of income, which is the opportunity school choice unlocks. In states with existing private school choice offerings, the tax credit scholarship can be stacked on top of the state offering, increasing purchasing power for parents and helping more students. In states that lack these options, this legislation will create educational opportunity for those K-12 parents and students.
Arizona
Arkansas
California
Colorado
Florida
Georgia
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Michigan
Minnesota
Missouri
Montana
New Jersey
New York
North Carolina
Ohio
Oklahoma
Pennsylvania
South Carolina
Tennessee
Texas
Utah
Virginia
Washington
Wisconsin
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Virginia
Washington
Wisconsin
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