Education Freedom Tax Credit: New program expands school choice with $1,700 tax credit
A groundbreaking federal tax credit initiative is revolutionizing educational opportunities nationwide. By contributing to designated organizations, taxpayers can enjoy a tax credit while these organizations facilitate scholarships for students seeking diverse educational pathways. This effort is designed to empower parents with more choices for their children's learning—spanning private school options, tutoring services, and specialized support for students with disabilities.
The US Departments of Education and Treasury have launched a new Education Freedom Tax Credit program under President Donald Trump’s Working Families Tax Cuts Act. This initiative aims to expand school choice by allowing taxpayers to claim a federal income tax credit of up to $1,700 for donations to approved Scholarship Granting Organizations (SGOs). These SGOs then provide scholarships to students, helping them access a wider range of K-12 education options, including private schools, tutoring, and support for students with disabilities. The administration is positioning this as a significant federal step to empower parents and increase educational flexibility.
This program is designed to lower the cost of schooling, tutoring, and other education-related services. The administration states the initiative will give parents greater flexibility to choose learning options that best suit their children’s needs.
The Education Freedom Tax Credit allows taxpayers to claim a federal income tax credit of up to $1,700 for donations made to approved Scholarship Granting Organizations (SGOs). The credit is applied against federal income taxes that would otherwise be paid to the government.
These SGOs then use the donated funds to provide scholarships to students. The scholarships are intended to help children attend a school of choice or access other approved education services. The administration has described the programme as the largest national expansion of education freedom in US history.
Education Secretary Linda McMahon said the tax credit would help families afford key education services such as tutoring and scholarships. She added that the programme recognises that students learn in different ways and aims to provide families with more options, regardless of income level.
Scholarships funded through the Education Freedom Tax Credit can be used for a wide range of qualified K-12 education expenses. These include tuition fees for private schools, tutoring services at public schools, and education-related support for students with disabilities.
The program covers expenses connected to public, private, and charter schools. According to the Education Department, this broad coverage is intended to allow families to customize their child’s education based on individual learning needs rather than being limited to a single schooling model.
As of the announcement, 23 US states have opted into the Education Freedom Tax Credit. These states include Alabama, Alaska, Arkansas, Georgia, Idaho, Indiana, Iowa, Louisiana, Mississippi, Missouri, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Virginia, West Virginia, and Wyoming.
The Treasury Department has encouraged other states to opt into the programme. Treasury Secretary Scott Bessent said the policy places decision-making power in the hands of parents rather than federal agencies. He also said the tax credit is intended to increase access to education programmes for millions of families across the country.
The administration has said it will continue to work with states and governors to expand participation in the programme. Families in participating states may begin accessing scholarships through eligible Scholarship Granting Organizations, subject to state-level implementation. The full details of the Education Freedom Tax Credit, including eligibility rules and operational guidelines, are available in the joint fact sheet released by the US Departments of Education and Treasury.