S. 370, the Education Freedom Scholarships and Opportunity Act, creates a federal tax credit program to encourage donations to scholarship organizations and workforce training programs. Individuals can claim tax credits of up to 10% of their adjusted gross income, while corporations can claim up to 5% of taxable income, for donations to eligible organizations that must distribute at least 90% of contributions as actual scholarships for K-12, career-technical, or vocational education. The program is capped at $10 billion annually—$5 billion for K-12 scholarships and $5 billion for workforce training—with federal funding distributed to states based on school-age population and poverty levels. States must identify eligible organizations by January 1 each year, and the Secretaries of Education and Treasury will coordinate implementation, with the option to reallocate unused funds between states. After five years or once scholarship credits reach $2.5 billion, the allocation formula may shift to prioritize states with existing tax-credit scholarship programs.
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