A new report indicates that the federal “Education Freedom Tax Credit Program” will be launched for the academic year 2027-2028, with the expectation that a vast majority of K-12 students in the United States will qualify for scholarship applications.
The advocacy policy center for universal school choice, the “American Federation for Children,” released an analysis report on July 28, revealing that currently 31 states in the U.S. have opted to participate in the program, making a total of 30.9 million children eligible for future benefits. If the remaining 19 states and Washington D.C. also participate, the number of eligible students is projected to increase to 51.7 million, accounting for 91.7% of all K-12 students in the U.S.
These estimates are based on the qualification criteria of household incomes not exceeding 300% of the local median income. However, scholarship granting organizations (SGOs) designated by each state are expected to prioritize assisting low-income families.
The federal scholarship tax credit program, which was permanently included in the federal tax law through the “Big and Beautiful Act” passed by Congress last year, allows U.S. taxpayers to receive a dollar-for-dollar reduction of up to $1,700 per year on their tax liability for donations made to SGOs in their state. These organizations then use the funds to provide scholarships to eligible children.
The decision of whether to participate in the program lies with the governors of each state.
In addition to providing assistance for private school tuition, states may also allow SGOs to provide transportation subsidies for attending private schools or subsidies for homeschooling students to purchase educational materials and related supplies.
Patrick Graff, a senior researcher at the “American Federation for Children” responsible for analyzing federal data and writing the report, emphasized that this system differs from the top-down bureaucratic model driven by the government and operates from the bottom-up through families, particularly benefitting students in rural areas that have long been lacking resources for private schools.
Using Florida as an example, Graff pointed out that the majority of the 700 new private schools established in the state over the past decade were located in small communities or rural areas.
Furthermore, the declining student population in many public school districts across the nation has led to the closure of schools, providing opportunities for private schools to purchase or rent unused school buildings.
Among the four major states in the U.S., governors of Florida, Texas, and New York have already expressed their intention to join the program, while California has yet to announce its participation.
The report indicates that aside from 18 states, all other states in the U.S. have established state-level Education Savings Accounts, Vouchers, or tax credit scholarship systems, with many states opting to participate in this new federal program.
The policy is based on a private charitable donation model rather than direct federal government expenditure. Unlike income deductions, this tax credit allows a full deduction of the donation amount from the tax liability. Unused credits can be carried forward for up to five years, and if the same donation has been applied for state tax credits, the federal credit amount should be correspondingly reduced.
Moreover, there is no set limit on the total amount of donations nationally.
Graff mentioned that it is currently difficult to estimate the scale of future donations, as the arrangement of donating first and then applying for tax credits remains unfamiliar to many taxpayers.
Leaders of several state-level teacher unions wrote to 24 Democratic governors on June 10, urging them not to participate in the federal program and criticizing the policy for substantially subsidizing families already attending private schools.
The open letter pointed out that this is not genuine school choice, but rather a tax avoidance mechanism subsidized by the federal government, aimed at accelerating education privatization while undermining investment in public schools.
Graff noted that Governor Kathy Hochul of New York believes this is a new way to keep funds within the state. New York spends an average of over $30,000 per student per year on education, with New York City exceeding $40,000.
In conclusion, Graff stated, “This is not a partisan issue. There are still approximately 20 million children residing in states that have not yet joined the program, which should serve as a warning signal.”