Treasury Clarifies Details of New Federal School Choice Program
1st October 2026
The new school year is well underway, but federal officials are looking ahead to next year’s school calendar and a new federal school choice option. This week, the U.S. Department of the Treasury released proposed and temporary guidance on the program to help state officials and families prepare.
As part of the “One Big, Beautiful Bill” signed by the White House in July 2025, lawmakers included a federal tax credit program for K-12 students that will take effect next year. The federal initiative is modeled after state education choice opportunities that make individuals and/or corporations eligible for tax credits on donations made to private school scholarship organizations.
The organizations then use the contributions to award K-12 private school scholarships to eligible students. Arizona lawmakers adopted the first such program in 1997, and policymakers in states across the country have approved similar provisions.
The federal tax credit only applies to individual, not corporate, tax filers and is capped at $1,700 per individual ($3,400 for married couples filing jointly). A unique—and troubling—provision in the federal program is that scholarship organizations can raise money for public schools.
Parents and taxpayers should wonder why this provision was included in a law modeled after private school choice laws. Today, the average per student spending in traditional schools has climbed to more than $20,000 per child, even as reading and math scores in most grades have been on a steady decline since before the COVID-19 pandemic. Meanwhile, state private education choice options result in cost savings to taxpayers.
