Trump Administration Releases Rules for Education Freedom Tax Credit

The Trump administration released rules on Thursday for the Education Freedom Tax Credit, a federal school choice program scheduled to launch on January 1. Established as part of a 2025 Republican tax and spending bill, the program offers a dollar-for-dollar tax credit of up to $1,700 for individuals and $3,400 for married couples who donate to non-profit Scholarship Granting Organizations (SGOs).

These SGOs will use the donations to fund K-12 scholarships for private school tuition, homeschooling, tutoring, and supplies. The United States Department of the Treasury and the IRS estimate the program will cost $26 billion annually and support 2.2 million scholarships by 2030. As of mid-September, 30 states have opted into the program, including Democratic-led New York, Colorado, Virginia, and North Carolina. Governors have until January 1 to decide on participation to avoid losing millions in federal funding.

Education Secretary Linda McMahon stated that the program ensures children have access to education not limited by ZIP code or family income. Conversely, U.S. Representative Gwen Moore criticized the initiative, arguing that the tax credits represent a direct pull from the treasury into corporate entities for private schools rather than investments in public education.