What Happened?

Starting in 2027, eligible taxpayers could claim a federal tax credit of up to $1,700 for qualifying contributions. The U.S. Department of the Treasury and Internal Revenue Service (IRS) published a Federal Register document titled "Federal Scholarship Tax Credit". ​

The Treasury Department and the IRS proposed rules describing a credit of up to $1,700 for eligible taxpayers' qualifying contributions, with the credit intended to launch in 2027. The IRS has not yet finalized the rules.

Why Does it Matter to Me?

Whether this program reaches your family depends partly on whether your governor opts in. New York Gov. Kathy Hochul opted New York into the program on Oct. 9. Pennsylvania Gov. Josh Shapiro said he wanted to wait for the new federal rules before deciding, according to The Center Square.

Families in states that opt in could use scholarship funds to send children to schools of their choice. Families in states that stay out would not have access.

Both Sides, Now

The House Education and Workforce Committee, chaired by Rep. Tim Walberg (R-MI), will hold a hearing titled "More Choices, Brighter Futures: Expanding Education Freedom" on Oct. 23. Committee chair Rep. Walberg scheduled a hearing titled "More Choices, Brighter Futures: Expanding Education Freedom" for Oct. 23.

Opponents argue the credit could steer resources away from public schools toward private institutions, reducing funding for the schools most families rely on.

The Treasury Department and the IRS released proposed rules for the Education Freedom Tax Credit on Oct. 1. Rep. Bobby Scott (D-VA), the committee's top Democrat, is expected to participate in the Oct. 23 hearing.

What Happens Next?

The Oct. 23 field hearing is set in Bethlehem, Pa., a state where the program's reach remains unresolved. The rules are intended to take effect in 2027. The IRS must review public comments and issue a final rule before any taxpayer can claim the credit or any state's participation is locked in.

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