The Trump administration laid out rules for its school choice tax credit coming next January. Some states, most of them Republican-led, are opting into it — while others have been more hesitant.
Some Democratic governors are joining teachers’ unions in calling the program an attack on the nation’s underfunded public schools.
Some states already have school choice scholarships — but this is the first federally funded school choice program in the U.S. It was signed into law last year as part of what President Donald Trump dubbed the “Big Beautiful Bill” Act.
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Under it, taxpayers can claim an annual $1,700, or $3,400 for married couples, if they contribute to approved “Scholarship Granting Organizations” or SGOs. These scholarships can contribute to expenses including private school tuition, as well as other educational expenses.
The U.S. Treasury Department and Internal Revenue Service said hundreds of SGOs could benefit from the program by 2030, and an estimated 11 million taxpayers will make nearly $26 billion in qualified contributions annually.
What are the guidelines?
States cannot make SGO requirements more restrictive, put restrictions on what kind of schools scholarship recipients can attend or what kinds of education expenses qualify.
“The proposed regulations also would not permit a State to use discretionary certification standards to exclude otherwise qualifying SGOs,” the Treasury Department said.
SGOs are set to be audited every year. Unused tax credits can be forwarded for up to five years.
Students from low-income families enrolled in government programs, or those in foster care, are automatically eligible for scholarships. Those living in households which make no more than 300% of the area’s median gross income can also get scholarships.
With the rules in place, about 96% of children in states taking part in the program can receive scholarship funds, the Treasury Department said.
Why are some states opting in and others aren’t?
It’s up to state governors, or “other individual, agency, or entity designated under State law,” to decide whether a state will participate in the tax credit for a calendar year.
Marty West, a professor and academic dean at the Harvard Graduate School of Education, said in an interview with the school-produced podcast Harvard EdCast that many Republican governors have programs “complementary” to the Trump administration’s in their state.
“This provides an additional source of funding to allow parents to access a new set of educational options,” he said.
On the other hand, “Democratic elected officials have tended to be skeptical of private school choice programs, in part, because they view them as a threat to support for and funding of traditional public schools,” he said.
State and federal public school funding is largely weighted by student attendance. School choice programs allow parents to send their children to a preferred private school, leaving the public school district with one fewer child and less funding.
Students in public schools still have access to scholarships funded by the tax credit for tutoring, special-needs services, books, supplies, computers and other equipment.
A tracker by Education Week shows 31 states have either opted into the program or plan to.
Virginia did so under Republican former Gov. Glenn Youngkin. In Kansas, Kentucky and North Carolina, GOP lawmakers overrode Democratic governors’ vetoes.
When announcing the state’s decision, Montana Gov. Greg Gianforte said that “opting in to this program gives Montanans another incentive to support the success of the next generation.”
Democratic Gov. Tony Evers, meanwhile, said Wisconsin won’t participate and vetoed legislation that would have required the state to opt in.
“Let’s just do the best we can with our public schools,” Evers said in an interview with The Milwaukee Journal-Sentinel last year. “We have plenty of voucher schools. We don’t need voucher money.”
Another Democrat, New York Gov. Kathy Hochul, reportedly intends to opt in. Chalkbeat wrote that her office still wants to review the details to make sure there are no “poison pills” before making an official decision.
A spokesperson for the governor told the publication that “Hochul is supportive of the federal tax credit scholarship and its potential to help New York students and schools.”
New York State United Teachers President Melinda Pearson argued that the regulations are indeed “loaded with poison pills,” however.
“If New York opts in, the state would be prohibited from setting standards for scholarship organizations, deciding which organizations can participate, or limiting the types of schools and expenses that receive these federal tax dollars,” she said. “That means New York could be forced to help funnel taxpayer-subsidized dollars to private schools that have admissions policies and practices that would never be acceptable in our public schools, while being denied the authority to put stronger safeguards around the program.”
American Federation of Teachers President Randi Weingarten also put out a statement urging state governors to reject the program, “not least of all because they will have no say or oversight over how the vouchers operate.”
“The reality is that for every precious public dollar funneled to private schools—money that could be spent on instruction, lowering class sizes, modern buildings or new books in the library—public school parents will be hunting for pennies on the floor,” she said. “This isn’t about ‘school choice’; it’s about the school’s choice: Private schools can simply refuse to accept poor kids, those with special needs or those with different religions. And they can refuse to submit to the basic accountability measures their backers hypocritically demand of public schools.”
Trump administration officials maintain the program is helping students gain new opportunities.
“Under President Trump, this Administration continues to transform America’s education system to meet the needs of each student,” U.S. Secretary of the Treasury Scott Bessent said. “The Education Freedom Tax Credit marks a new chapter in educational freedom and opportunity by establishing America’s first nationwide school choice program and empowering states to give students and families more options.”
