Sponsors (34)
Official title: Amend the Internal Revenue Code of 1986 to repeal the tax credit for contributions of individuals to scholarship granting organizations, and for other purposes.
Introduced April 15, 2026 by Mark Edward Kelly · Last progress April 15, 2026
The bill trades simpler tax rules and modestly higher federal revenue for the loss of donor tax incentives and privately funded scholarships, which could reduce aid for students and strain scholarship nonprofits.
Taxpayers who do not use the scholarship-contribution credit or the section 139K income exclusion will face a simpler federal tax code with fewer special provisions to track.
Taxpayers and the federal budget: eliminating the credit and exclusion could increase federal revenues that may be available for other programs or deficit reduction.
Donors to scholarship-granting organizations will lose a tax credit, reducing the after-tax incentive to give and likely cutting private scholarship funding — which would cause funding shortfalls and fewer privately funded scholarships for students, especially low-income students, and strain scholarship nonprofits.
Recipients who previously received amounts excluded under section 139K may have those amounts taxed after 2026, increasing tax bills for affected low‑income recipients.
Based on analysis of 2 sections of legislative text.
Repeals a federal tax credit and an income exclusion for donations to scholarship-granting organizations, removing those tax incentives for taxable years ending after Dec 31, 2026.
Repeals two federal tax provisions that currently provide tax incentives for donations to scholarship-granting organizations that fund private school scholarships. The bill removes a tax credit (section 25F) and an exclusion from gross income for certain scholarship contributions (section 139K), with the repeals generally taking effect for taxable years ending after December 31, 2026 (and the income exclusion repeal applying to amounts received after that date). This is a targeted change to the Internal Revenue Code that would reduce federal tax benefits tied to private school scholarship funding.