The bill would create federal tax credits for individuals and corporations that donate to qualifying scholarship organizations. The organizations would award scholarships to students in households with incomes no higher than 300% of the area median income. Eligible expenses include tuition, books, tutoring, some tests and therapies, and home-school expenses. Scholarships could be used at public, private, or religious schools, and qualifying scholarships would not count as the recipient’s income for federal tax purposes. The bill also sets rules for scholarship organizations and limits government control over them and nonpublic schools. The bill’s provisions generally apply to tax years ending after December 31, 2025.
If enacted, eligible students could receive scholarships for listed school expenses. Individuals and corporations could claim tax credits for donations to qualifying scholarship organizations, subject to limits and available allocations. Individual donors could not also claim the same donation as a charitable deduction. The bill would give parents of scholarship recipients a right to intervene in certain court cases challenging the bill’s constitutionality.
The bill sets a $10 billion annual cap on allocations for qualifying donations starting in 2026. The cap could increase after a year in which at least 90% of it is allocated, and would not decrease below the prior year’s cap. Individual credits are limited to the greater of 10% of adjusted gross income or $5,000, but are also subject to the allocated cap and reductions for certain state tax credits. Corporate credits are limited to 5% of taxable income. No publicly available information gives a total estimate of federal revenue effects or administrative costs.
No publicly available information.
No publicly available information.