Sponsors (111)
The bill sacrifices tax incentives for private scholarship donations (potentially reducing private scholarship funding and increasing some recipients' tax bills) in order to raise federal revenue and remove a preferential tax treatment that some view as unfair.
All taxpayers: elimination of these tax benefits will modestly increase federal revenue that can be used to fund public services.
Students and families: removing the tax preference for certain private scholarship-related payments reduces a preferential tax treatment and may level the playing field between private scholarship programs and public education funding choices.
Donors and scholarship organizations: donors lose a federal tax credit, reducing the after-tax incentive to contribute and likely decreasing charitable giving to scholarship-granting organizations.
Students and low-income families: recipients of scholarships or related payments may have to report amounts received after Dec 31, 2026 as taxable income, increasing tax bills for some students and families.
Taxpayers and tax administrators: the change (lost credits and newly taxable amounts) could increase filing complexity and IRS/state administrative burdens during the transition after Dec 31, 2026.
Based on analysis of 2 sections of legislative text.
Repeals the federal tax credit for contributions to scholarship-granting organizations and ends the income exclusion for certain scholarship payments, effective for taxable years ending after Dec 31, 2026.
Official title: To 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 June 11, 2026 by Gwendolynne S. Moore · Last progress June 11, 2026
Repeals the federal tax credit for contributions to scholarship-granting organizations and eliminates the federal income exclusion for certain scholarship payments, removing those incentives for donors and tax-free treatment for some scholarship funds. The changes apply to taxable years ending after December 31, 2026 (and to amounts received after that date for the income exclusion).