^{The Bottom Line} The Education Freedom Tax Credit: A Historic Win for American Families

A historic expansion of education freedom is underway in America. Signed into law by President Donald Trump on Independence Day 2025, the Federal Tax Credit Scholarship, also known as the Education Freedom Tax Credit, is poised to transform educational opportunities for millions of American children.

Beginning January 1, 2027, taxpayers can contribute to an approved nonprofit scholarship granting organization and receive a dollar-for-dollar federal tax credit up to $1,700 for individuals and $3,400 for married couples filing jointly.

Importantly, the program has no annual cap on total contributions and does not sunset, creating the potential for billions of dollars in privately funded scholarships each year long into the future.

The impact could be extraordinary. By 2030, the U.S. Department of the Treasury and Internal Revenue Service estimate that 11 million taxpayers will contribute nearly $26 billion annually, potentially funding as many as 2.2 million scholarships each year.

Scholarships can be used for private school tuition, academic tutoring, special-needs services, books, supplies, computers, and other qualifying educational expenses. Families earning up to 300% of their area median income are eligible, potentially encompassing 96% of children in participating states.

For families who have long desired a different educational setting for their children but could not afford it, this new scholarship program is a game changer.

Equally important, the Education Freedom Tax Credit protects school autonomy. This is not a government-funded program. Instead, taxpayers make private contributions to nonprofit scholarship granting organizations, which award scholarships to students. The funds do not pass through a federal education agency, and the program imposes no new federal mandates on participating schools.

This is particularly significant for private and faith-based schools seeking to preserve their distinctive missions and educational approaches.

The need for greater education freedom cannot come soon enough. Roughly seven in 10 public school students are not performing at grade level in reading or mathematics, despite decades of increased education spending.

Continuing to pour more money into the public education system, failing to produce improvements in student learning, is not the answer. Parents need the freedom to choose the education environment that best meets their child’s individual needs.

With 31 states already opted into the program, momentum continues to build. The Education Freedom Tax Credit is a historic opportunity to expand access to education choice, empower parents, and encourage innovation.

Every child deserves access to a quality education, regardless of family income or zip code. This landmark legislation, signed into law, brings our country a significant step closer to making education freedom a reality for millions more American families.