A school choice advocacy group released analysis indicating that the federal school choice tax credit program—the federal government’s first major initiative in this policy area—could extend eligibility to approximately 92% of the nation’s K-12 students. The program, established through the One Big Beautiful Bill Act, allows taxpayers to claim dollar-for-dollar federal tax credits up to $1,700 in exchange for donations to scholarship-granting organizations that fund K-12 expenses including private school tuition, homeschool costs in certain states, and services for public school students such as tutoring and technology.
The expansive potential eligibility stems largely from generous income thresholds, set at 300% of local median income. These thresholds range from approximately $107,100 in some rural counties to $616,500 in high-income areas. Currently, 31 states have formally opted in or signaled intent to participate, representing about 60% of the nation’s students. However, 19 states, many with Democratic governors, have not yet committed. Some Democratic governors cite the absence of Treasury Department regulations—expected later this year—before making final decisions. Three Democratic governors have stated they will not participate.
Several variables will ultimately determine participation levels and scholarship distribution. The number of states joining annually remains uncertain, as governors must opt in each year. The program carries no cap on the number of taxpayers who can claim credits or the total federal expenditure, though congressional estimates project $500 million in credits next year and $4.4 billion by 2034. Taxpayer awareness of the program remains limited, and marketing efforts could prove expensive.
The size and focus of scholarship-granting organizations will also shape outcomes, as the law does not specify scholarship award amounts and Treasury rules will constrain state-level regulation. Additionally, how aggressively public schools pursue scholarship funds remains unclear. While some school districts have begun preparing to leverage the program, teachers’ unions have opposed the initiative, expressing concerns it will primarily benefit private education while providing minimal support to public school students. The Treasury Department is also determining whether homeschool students qualify, with current guidance suggesting eligibility in 22 states that legally define homeschooling as a private or religious school option.
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