The U.S. Departments of Education and Treasury today released a joint fact sheet detailing the Education Freedom Tax Credit, a program established by President Trump’s Working Families Tax Cuts Act. The announcement comes during National School Choice Week.
Expanding Education Options
According to the fact sheet, the Education Freedom Tax Credit represents the largest national expansion of education freedom in U.S. history. It aims to provide families with more affordable options for their children’s education.
U.S. Secretary of Education Linda McMahon stated the program is supported by nearly half of America’s governors, representing both political parties. She emphasized the program’s potential to help families afford services like tutoring and scholarships, allowing them to customize their child’s education.
U.S. Secretary of the Treasury Scott Bessent echoed this sentiment, asserting that the Trump Administration has prioritized school choice. He encouraged states that have not yet participated to join the program.
How the Tax Credit Works
Taxpayers who contribute to Scholarship Granting Organizations (SGOs) may receive a credit of up to $1,700 on their federal income taxes. These SGOs then use the funds to provide scholarships for students to attend the school of their choice or access related educational services.
Scholarships can be used for a wide range of qualified expenses, including tuition at private schools, tutoring in public schools, and support services for students with disabilities.
State Participation
As of today, 23 states have opted into the Education Freedom Tax Credit. These states are: Alabama, Alaska, Arkansas, Georgia, Idaho, Indiana, Iowa, Louisiana, Mississippi, Missouri, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Virginia, West Virginia, and Wyoming.
Frequently Asked Questions
What is the Education Freedom Tax Credit?
The Education Freedom Tax Credit is a federal tax credit for contributions made to Scholarship Granting Organizations, which then provide scholarships for students to access a wider range of educational options.
How much is the tax credit worth?
Taxpayers can receive a credit of up to $1,700 for contributions made to eligible Scholarship Granting Organizations.
What can scholarship funds be used for?
Scholarships can be used for any qualified education expense of an eligible student, including tuition, tutoring, and support services related to K-12 education in public, private, or charter schools.
As more states consider participation, the impact of this tax credit on educational access and funding models could become more pronounced. It remains to be seen how this program will evolve and whether additional states will choose to opt in.
