Sponsors (36)
The bill simplifies the tax code and could raise federal revenue by removing a targeted scholarship tax credit and exclusion, but it risks shrinking private scholarship funding and imposing higher tax bills on some low-income recipients.
Most taxpayers who do not use the scholarship contribution credit or the income exclusion will face a simpler tax code with fewer special provisions to track.
Eliminating the scholarship contribution credit and the related exclusion could increase federal revenues available for other programs or deficit reduction.
Donors to scholarship-granting organizations will lose a tax credit, reducing the after-tax incentive to contribute; that is likely to lower private scholarship funding and decrease scholarship availability for students—particularly low-income students—while straining nonprofit scholarship organizations and affected schools.
Individuals who previously received amounts excluded from income under section 139K may face taxable income on those amounts after 2026, increasing their tax bills and creating potential unexpected tax liability for low-income recipients.
Based on analysis of 2 sections of legislative text.
Removes a federal tax credit and an income exclusion tied to contributions for private-school scholarship organizations, effective for taxable years ending after Dec. 31, 2026.
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
Repeals two Internal Revenue Code provisions that provide tax benefits tied to contributions for private school scholarship programs, removing a tax credit for donors and an exclusion from income for some scholarship-related payments. The changes generally apply to taxable years ending after December 31, 2026. The effect is to eliminate federal tax incentives that reduce donors' and recipients' federal tax liability for contributions to scholarship-granting organizations, which is intended to keep public resources directed to public schools rather than redirected to private-school scholarships.