Sponsors (3)
Introduced May 20, 2025 by Burgess Owens · Last progress May 20, 2025
The bill expands parental choice and channels private donations into scholarships through refundable tax credits, transparency rules, and legal protections, but does so at the cost of reduced federal revenue, potential diversion of funds and oversight from public schools, geographic and administrative complexity, and unequal benefits across households.
Taxpayers and donors (including some middle-class families and corporations) can reduce federal tax liability by claiming credits for contributions to scholarship-granting organizations, backed by predictable annual capacity (up to $10 billion starting 2026) and mechanisms to expand or reallocate capacity during high demand.
Students from low- and moderate-income households and their parents gain expanded access to scholarships and broader permitted uses (tuition, curricula, books, tutoring, dual enrollment, transportation, home-school costs) and can use awards at private or religious K–12 schools, increasing families' educational choice and flexibility.
Parents and student recipients receive scholarship payments that are excluded from recipients' taxable income, increasing recipients' after-tax support and simplifying administration for scholarship-granting organizations.
All federal taxpayers face lower federal revenue because credits (including corporate credits), disallowance of deductions for credited amounts, and excluding scholarships from recipient income reduce taxable base, which could increase pressure on other tax bases or public spending.
Public schools, students who remain in public schools, and local taxpayers may lose funding or face equity harms if public resources and students shift toward private/religious schools via scholarship-funded payments.
Donors and students face geographic and volume limits: state allocations, binding designations, and a $10 billion national cap (with mid-year reallocations) can prevent some donors from claiming credits and leave unmet scholarship demand or unequal availability across states.
Based on analysis of 5 sections of legislative text.
Creates federal individual and corporate tax credits for donations to scholarship-granting organizations, sets a $10B annual national cap with state allocations, excludes scholarships from taxable income, and limits government control over SGOs and private/religious schools.
Creates new federal individual and corporate tax credits to encourage donations to scholarship-granting organizations (SGOs) that pay K–12 education expenses for eligible students, with a $10 billion national annual limit allocated to states. Excludes SGO scholarships from recipients' taxable income, requires Treasury to run a real-time tracking and state allocation system, sets program rules for qualifying SGOs and expenses, and restricts government entities from treating SGOs or participating private/religious schools as government actors or imposing conditions that would exclude or disadvantage them. The credits are nonrefundable for individuals (limited by AGI or a fixed dollar cap) and limited for corporations (a percent of taxable income); both are subject to volume caps, carryforward rules, anti–self-dealing and verification requirements for SGOs, and take effect for taxable years/amounts after December 31, 2025.