Parents of 51.7 million children now qualify for the new Education Freedom Tax Credit for scholarships, according to a new estimate released by its proponents Tuesday.
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So far, 31 states have opted in or signaled their intent to opt into the program, and they are home to 30.9 million eligible students (59.8% of the national total), according to an
The Education Freedom Tax Credit was included as part of the One Big Beautiful Bill Act last year. It provides a dollar-for-dollar federal tax credit of up to $1,700 for contributions made to a Scholarship Granting Organization, or up to $3,400 for married couples filing jointly. SGOs are nonprofits that accept qualified contributions from individuals and use the funds to provide scholarships for education-related services at private or public schools, including tuition, fees, academic tutoring and classroom supplies. The EFTC takes effect in 2027.
States must opt-in to become a “covered state,” and states or the District of Columbia would have to voluntarily elect to participate in this tax credit and identify the qualifying SGOs in that state. The statute says the governor or “other individual, agency, or entity designated under state law to make such elections on behalf of the state with respect to Federal tax benefits” can make the election to opt-in on behalf of the state. The covered state must then provide a list of the SGOs that meet the federal statutory requirements by Jan. 1 of each calendar year.
Taxpayers must then make a charitable contribution to a SGO on a state SGO list. When filing the taxpayer’s annual federal income tax return, the taxpayer would receive a credit against the tax owed up to $1,700. If the entire $1,700 credit cannot be claimed in the year of the contribution, the unused portion of that credit can be carried forward for up to five years.
“This report provides the first state-by-state estimates of how many students are eligible to receive scholarships under the Education Freedom Tax Credit, finding that roughly nine in ten children nationwide meet the income and enrollment criteria,” said Patrick Graff, a senior fellow at the American Federation for Children who did the analysis, in a statement. “Nearly 31 million eligible students live in states that have already signaled they will participate in the EFTC, while over 20 million eligible students live in states that have not yet opted in. The estimates in this report provide data for families, advocates, scholarship organizations and lawmakers to use as they discuss the scale of this opportunity for K-12 students across the country.”
The group is pushing for more states to opt into the program. “Dr. Patrick Graff’s new analysis shows exactly what is at stake: 51.7 million children across the country stand to benefit from the Education Freedom Tax Credit, but every governor needs to opt in so that all of them can benefit,” said American Federation for Children: CEO Tommy Schultz in a statement For governors and states who have taken swift action to opt in, thank you, and for governors still considering opting in, what are you waiting for? Children and families in your states, by the millions, are waiting for the educational resources that will support them through the tax credit. This is a no-brainer, and we at AFC are seeking to ensure the EFTC reaches as many families as possible, as soon as possible.”
Opponents of such programs believe they will remove funding and students from already struggling public schools. Private schools are not as closely regulated by state regulators, which can lead to gaps in oversight. A recent
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