Sponsors (34)
Introduced January 29, 2025 by Bill Cassidy · Last progress January 29, 2025
The bill expands and tax-advantageously supports private K–12 scholarships—boosting choice and private funding—while trading off federal revenue, potential pressure on public-school resources and accountability, and new administrative and targeting risks.
Low- and moderate-income students and their families (households ≤300% AMI) gain expanded access to K–12 scholarship funding and greater ability to use that aid for private and faith-based schools, increasing schooling choices and affordability.
Individuals and corporations are incentivized to contribute to Scholarship Granting Organizations (SGOs) through federal tax credits and a predictable national credit pool, encouraging private funding for K–12 scholarships.
Families who receive K–12 scholarships will not have those awards counted in a dependent's gross income, lowering taxable income for recipients and increasing the take-home value of scholarship aid.
Tax credits for donors and the exclusion of scholarship awards from gross income will reduce federal revenue, potentially increasing deficits or forcing trade-offs with other federal programs and services.
Shifting public tax-advantaged support toward private-school scholarships risks reducing resources, enrollment, and political support for public schools and may weaken accountability for publicly funded education.
The bill limits state and local governments' ability to set conditions on private-school participation, which could reduce enforcement of nondiscrimination, safety, or educational standards in some jurisdictions.
Based on analysis of 5 sections of legislative text.
Creates new federal tax credits for individuals and corporations that make donations to scholarship-granting organizations (SGOs) that provide private-school scholarships for K–12 students. Sets rules for who qualifies for scholarships and what expenses are covered, requires SGOs to meet operational, audit, and anti‑self‑dealing rules, excludes SGO scholarships from recipients’ taxable income, establishes a $10 billion annual national cap on credits with a state reserve and first-come, first-served allocation system, and prohibits government entities from treating SGOs or participating private or religious schools as government actors or from excluding them from participation. Applies to taxable years and amounts after December 31, 2025, and requires the Treasury to maintain a real‑time tracking system for the annual cap and to allocate credits among taxpayers and states. Parents of scholarship recipients are given an explicit right to intervene in lawsuits seeking to invalidate provisions of the Act relating to scholarships and schools.