Federal tax credit could steer $10 billion to private school scholarships

Nonprofit agencies that dispense private school scholarships to low-income families say they expect Congress to pass tax credit legislation giving them $10 billion for another 2 million students.

The Educational Choice for Children Act would allow taxpayers to deduct up to 10% of their adjusted gross income and corporations up to 5% of taxable income as donations to private K-12 scholarship funds. It builds on policies in 21 states — including Pennsylvania, Texas, and Arizona — allowing similar deductions on state tax returns.

Agency leaders interviewed by The Washington Times expressed optimism that the act will pass the Senate and House in May’s budget reconciliation process, allowing them to distribute an average of $4,500 per student to a growing list of applicants after President Trump signs it.

“This is an important issue for poor families seeking better options for children who don’t fit into public schools,” said Joshua D. Hale, president and CEO of the Big Shoulders Fund, which helps roughly 5,000 students in the Chicago area pay for Catholic schools charging $5,500 to $10,000 a year. “A federal tax credit is one more way to help families on the margins meet their child’s needs.”

Mr. Hale, whose privately funded charity primarily serves families of four earning $45,000 a year, said the federal legislation would greatly benefit them since Illinois does not allow state deductions.

In places that have allowed state tax credits over the past 25 years, families can only access the money by applying to approved charities.

While these scholarship groups do not see federal tax credits as a partisan issue, they acknowledge that Republicans are more likely than Democrats to vote for them.

“The biggest difference is you now have an executive branch committed to school choice, and Congress is listening,” said Norton Rainey, CEO of ACE Scholarships in Colorado, which allows state tax credits.

Founded in 2000, ACE Scholarships has awarded 80,000 grants worth nearly $212 million for children of modest means to attend Catholic, secular and other private schools.

Last year, Mr. Rainey said the Denver nonprofit distributed $4,000 apiece to almost 25,000 students in 12 states from Delaware to Utah to attend private campuses with annual tuitions averaging $8,000 for middle school and $10,000 for high school.

Some school choice advocates estimate that the $10 billion federal tax credit would nearly triple the sum that 1.04 million U.S. students received in 2024 from state-level vouchers, school choice laws and personal income tax or tax credit scholarships.

The 175 organizations supporting a federal tax credit include the Association of Christian Schools International, the U.S. Conference of Catholic Bishops and the California Policy Center.

“The ECCA comports with President Trump’s vision for improving K-12 education outcomes by empowering families and communities,” said Tony de Nicola, board chairman of the Invest in Education Coalition. “

Mr. de Nicola’s advocacy group counts nearly 600 school choice scholarship funds nationwide and expects more to appear if the act becomes law. Active groups include most Catholic dioceses and 200 in Pennsylvania alone, which enacted state tax incentives in 2001.

The Children’s Scholarship Fund awarded $84 million in publicly and privately funded grants to 35,138 low-income students in 20 states for the 2024-25 academic year. Those states ranged from Pennsylvania to New York and California, which do not allow tax credits.

The New York City-based fund primarily serves K-8 students — including more than 200 Catholic, Jewish, Islamic, Eastern Orthodox, secular and homeschooling institutions in the Big Apple.

“A federal tax credit would be a game-changer in places like California and New York, where school choice programs are unlikely to pass at the state level,” said Elizabeth Toomey, a spokeswoman for the Children’s Scholarship Fund. “There’s a real need for it because the definition of education has been expanding.”

During the pandemic, millions of parents pulled their children out of struggling public campuses that imposed virtual learning requirements, which experts later blamed for standardized English and math scores falling to historic lows. Most of these families shifted to homeschooling or private schools instead.

Under the Biden administration, united opposition from the White House and Democrat-controlled Senate blocked the ECCA from advancing when Republicans previously introduced it in 2022 and 2023.

The nation’s largest teachers’ unions, which have long supported the Democratic Party, argue that school choice laws favor wealthy campuses and siphon tax dollars away from the 90% of U.S. students who attend public institutions.

“We won’t be silent as anti-public education politicians try to steal opportunities from our students, our families, and our communities to pay for tax cuts for billionaires,” Becky Pringle, president of the National Education Association, said in a March 20 statement. “Together with parents and allies, we will continue to organize, advocate, and mobilize so that all students have well-resourced schools that allow every student to grow into their full brilliance.”

Led by GOP Sen. Bill Cassidy of Louisiana and Rep. Adrian Smith of Nebraska, dozens of Republican lawmakers on Jan. 29 reintroduced the ECCA in the Senate and House.

“When you give parents a choice, you give kids a better chance at achieving their dreams,” said Sen. Tim Scott of South Carolina, a co-sponsor of the Senate bill.

That same day, Mr. Trump signed an executive order directing the Education Department to make federal dollars available for parents to spend on the schools of their choice, bolstering expectations that the ECCA will become law this year.

“The Trump administration is committed to expanding education options for parents in their children’s education,” Education Secretary Linda McMahon said Monday, commenting on new guidelines for states to use federal grants for that purpose.