State participation in the federal K-12 education tax credit scholarship program

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  • State participation in the federal K-12 education tax credit scholarship program

See also: U.S. school choice tax credit scholarship program

Congress created a federal school choice tax credit scholarship program as part of the One Big Beautiful Bill Act, which President Donald Trump (R) signed into law on July 4, 2025. The credit, called the Education Freedom Tax Credit, was the first federal private school choice policy enacted. Private school choice policies generally allow families to use government funding for private educational expenses. The statute also allows the scholarships to fund public school educational expenses.

The law created a dollar-for-dollar nonrefundable tax credit. The credit was scheduled to take effect January 1, 2027, allowing individuals to make credit-eligible donations up to $1,700 to authorized scholarship-granting organizations (SGOs). The law required states to opt into the program by submitting to the U.S. Treasury a list of SGOs, and authorized eligible families to use the scholarships on a variety of educational expenses, including private school tuition, tutoring services, textbooks, and more. In order to qualify for scholarships—which are distributed by SGOs—students had to live in households earning no more than 300% of the area's median gross income and be eligible to enroll in K-12 schools.

Dive deeper:

• Latest news. This section catalogues the latest news and announcements from state officials and lawmakers.
• Background. This section contains information about education tax credit programs in the United States and how the federal education tax credit program functions.
• Participating states. This section lists the states that have opted into the federal education tax credit program.
• Noteworthy events. This section contains noteworthy events related to the federal private school choice tax credit.

Latest news

The timeline below shows the latest news regarding how state officials and lawmakers are responding to the federal K-12 education tax credit program. Click View all to see the complete timeline.

• March 17, 2026

  The Kentucky Legislature overrode Gov. Andy Beshear's (D) veto of a bill opting the state into the program.

• January 29, 2026

  New Hampshire Governor Kelly Ayotte (R) said she was opting the state into the program.

• January 28, 2026

  Florida Governor Ron DeSantis (R) announced that the state would participate in the federal school choice tax credit scholarship program.

• January 27, 2026

  The U.S. Department of Education and the U.S. Department of the Treasury issued a joint fact sheet detailing the program. It included a list of 23 states that had formally opted into the program as of Jan. 27.

• January 26, 2026

  North Dakota Governor Kelly Armstrong (R) announced that the state would participate in the program.

• January 22, 2026

  Indiana Governor Mike Braun (R) announced that the state would participate in the program.

• January 21, 2026

  Montana Governor Greg Gianforte (R) announced that he formally opted the state into the federal school choice tax credit scholarship program.

• January 20, 2026

  Georgia Governor Brian Kemp (R) announced that he formally opted Georgia into the federal school choice tax credit scholarship program.

• January 19, 2026

  Mississippi Governor Tate Reeves (R) announced that he formally opted the state into the federal school choice tax credit scholarship program.

• January 16, 2026

  Idaho Governor Brad Little (R) formally elected to participate in the program by submitting IRS Form 15714 to the U.S. Department of the Treasury.

• January 16, 2026

  Alabama Governor Kay Ivey (R) signed Executive Order No. 742, signaling the state's participation in the federal education tax credit scholarship program.

• January 16, 2026

  Arizona Governor Katie Hobbs (D) vetoed SB 1106, a budget bill that, among other provisions, would've required Arizona to participate in the federal school choice tax credit scholarship program.

• January 16, 2026

  Arkansas Governor Sarah Huckabee Sanders (R) said the state would participate in the program.

• January 5, 2026

  Iowa Gov. Kim Reynolds (R) announced that she intended to opt Iowa into the program.

• January 1, 2026

  Virginia Gov. Glenn Youngkin (R) announced that Virginia became the first state to formally opt into the federal school choice tax credit program, effective January 1, 2026.

• December 17, 2025

  Louisiana Governor Jeff Landry (R) said that Louisiana would participate in the program.

• December 12, 2025

  The Internal Revenue Service (IRS) announced that states can make advanced elections to participate in the program beginning January 1, 2026, before submitting a list of qualified SGOs. The IRS said this option provides SGOs additional time to prepare for the for the 2027 start of the credit program.

• December 10, 2025

  Texas Gov. Greg Abbott (R) announced he intended on opting the state into the federal K-12 education tax credit program.

• December 5, 2025

  Colorado Gov. Jared Polis (D) said he plans to opt the state into the federal K-12 education tax credit program.

• November 14, 2025

  South Dakota Gov. Larry Rhoden (R) announced he intended on participating in the federal education tax credit program.

• September 29, 2025

  Nebraska Gov. Jim Pillen (R) issued an executive order directing state agencies to prepare to participate in the tax credit program.

• September 9, 2025

  The Milwaukee Journal Sentinel reported that Wisconson Gov. Tony Evers (D) said he wouldn't opt the state into the program because doing so would harm public schools.

• August 13, 2025

  Chalkbeat reported that Oregon and New Mexico Gov.s Tina Kotek (D) and Michelle Lujan Grisham (D) said they would not participate in the program.

• August 6, 2025

  North Carolina Gov. Josh Stein (D) vetoed HB 87, a bill that would have directed the State Education Assistance Authority to submit to the U.S. Department of the Treasury a list of qualified scholarship granting organizations in the state, thereby opting the state into the federal program. In his veto message, Stein said he intended on opting the state into the program once the U.S. Department of the Treasury issues formal guidance. The

• August 4, 2025

  Education Week reported that a representative for Tennessee Gov. Bill Lee (R) said he was planning to opt the state into the program.

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Background

What are tax credit programs?

See also: Education tax credits, School choice glossary

Education tax credits allow corporations and individuals to receive tax credits for contributing to or paying for certain education services or programs.

There are three different types of education tax credit programs:

• Tax-Credit Education Savings Accounts (ESAs): Tax-credit ESAs allow taxpayers to receive full or partial tax credits when they donate to nonprofit organizations that fund and manage parent-directed K-12 education savings accounts.
• Tax-Credit Scholarships: Tax-credit scholarships allow taxpayers to receive full or partial tax credits when they donate to nonprofits that provide scholarships for private or public school educational expenses. Eligible taxpayers can include both individuals and businesses. The federal K-12 school choice program is a tax-credit scholarship program.
• Individual K–12 Tax Credits and Deductions: Tax credits and deductions allow parents to receive state income tax relief for approved educational expenses, which can include private school tuition, books, supplies, computers, tutors, and transportation. Tax credits lower the total taxes a person owes; a deduction reduces a person’s total taxable income.

Twenty-five states run 38 education tax credit programs as of February 2026. States running tax credit programs are allowed to participate in the federal tax credit in addition to existing programs.

How does the federal education tax credit work?

See also: How the U.S. school choice tax credit scholarship program works

As passed by the One Big Beautiful Bill Act, under the tax credit program:

• Donors could lower their tax liability by $1 for every $1 donated to accredited Scholarship-Granting Organizations (SGOs) of up to $1,700. The total amount of credits is not capped.
• The scholarships would be available to families making 300% of the median income in the region. The scholarships, distributed by SGOs, could be used to pay private school tuition, hire tutors, and purchase textbooks and other supplies. The scholarships would be available to homeschooling families.
• States must elect to participate in the program.

Participating states

To officially opt in to the program, states must fill out and submit IRS Form 15714 and submit a list of qualified SGOs. This section includes details about states that have opted in and submitted a list of qualified SGOs to the U.S. Treasury, those that have officially stated their intention to opt in or out, and those that have signaled their intention for participation in the program.

Partisan breakdown of states that have indicated participation

• Five have Democratic trifectas. Two states—Virginia and Colorado— have indicated participation in the program, while three states—Hawaii, New Mexico, and Oregon— have said they would not participate, though all three governors of those states are reconsidering participation, according to EdWeek.
• Twenty-three have Republican trifectas. All twenty-three states—Alabama, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, and Wyoming— said they would participate in the program.
• Six have divided governments. The Kentucky Legislature overrode Gov. Andy Beshear's (D) veto of a bill requiring the state to opt into the program. In North Carolina and Arizona, legislation to indicate participation failed, and Wisconsin Gov. Tony Evers (D) said the state wouldn't participate, though the legislature is considering a bill that would require the state to participate. Alaska and Nevada formally opted into the program.

States officially participating in the program

This section includes a list of states that have officially opted into the program, according to public records. To officially opt in to the program, states must fill out and submit IRS Form 15714 and submit a list of qualified SGOs.

• Alabama
• Alaska
• Arkansas
• Colorado
• Florida
• Georgia
• Idaho
• Indiana
• Iowa
• Louisiana
• Mississippi
• Missouri
• Montana
• Nebraska
• Nevada
• New Hampshire
• North Dakota
• Ohio
• Oklahoma
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Virginia
• West Virginia
• Wyoming

States that have officially stated whether they will opt in or not, but have not formally opted in

As of March 18, 2026, legislatures of two states—Arizona and North Carolina—had taken official action to indicate that they will participate in the program, but the governors of each state vetoed the legislation. The Kentucky Legislature overrode Governor Andy Beshear's (D) veto of a bill requiring the state to participate in the program every year, and the Indiana Legislature passed a bill requiring the state to opt into the program, though the governor had already done so for Fiscal Year 2027.

Official action

State	Official action	Status	Date
Kentucky	House Bill 1	Veto overridden	March 17, 2026
Indiana	House Bill 1266	Enacted	March 12, 2026
Arizona	Senate Bill 1106	Vetoed	January 16, 2026
North Carolina	House Bill 87	Vetoed	August 6, 2025

Governors' statements on opting in

This section contains gubernatorial statements on their states' participation in the federal K-12 education tax credit scholarship program. These statements do not constitute official action.

Arkansas

Governor Sarah Huckabee Sanders (R) said on January 16, 2026, that the state would participate in the program.

Colorado

• The Colorado Sun reported in December 2025 that Governor Jared Polis (D) said Colorado will opt into the federal education tax credit program.

Indiana

Indiana Governor Mike Braun (R) announced on January 22, 2026, that the state would participate in the program.

Iowa

• Governor Kim Reynolds (R) said on January 5, 2026, that Iowa would participate in the program.

Louisiana

• Governor Jeff Landry (R) said on December 17, 2025, that Louisiana would participate in the program.

North Dakota

North Dakota Governor Kelly Armstrong (R) announced on January 26, 2026, that the state would participate in the federal school choice tax credit program.

South Dakota

• Argus Leader reported in November 2025 that Governor Larry Rhoden (R) said South Dakota will opt in to the federal education tax credit program.

Tennessee

• Education Week reported in August 2025 that a spokesperson for Tennessee Governor Bill Lee (R) said the state will opt into the program.

Texas

• Governor Greg Abbott (R) said on December 10, 2025, that Texas would participate in the program.

Governors' statements on not opting in

This section contains gubernatorial statements on their states' participation in the federal K-12 education tax credit scholarship program. These statements do not constitute official action.

Hawaii

• EdWeek reported that in November 2025, Hawaii Governor Josh Green (D) said the state would not participate.

New Mexico

• Chalkbeat reported in August 2025 that New Mexico Governor Michelle Lujan Grisham (D) said she would not opt into the program.

Oregon

• Chalkbeat reported in August 2025 that Oregon Governor Tina Kotek (D) said she would not opt into the program.

Wisconsin

• The Milkwaukee Journal Sentinel reported in September 2025 that Wisconsin Governor Tony Evers (D) said he will not opt in to the federal program. Wisconsin lawmakers passed legislation to opt into the program on January 23, 2026, but it was pending the governor's action as of February 19, 2026.

Noteworthy events

This section contains noteworthy events related to the federal education tax credit scholarship program.

Kentucky Legislature overrides veto of bill opting into the program (2026)

On March 17, 2026, the Kentucky Legislature overrode Governor Andy Beshear's (D) veto of House Bill 1, which opted the state into the federal school choice tax credit scholarship program. Kentucky has a divided government; the legislature has a Republican majority, and the governor is a Democrat. The bill requires the state to opt in every year.

Colorado Democrats introduce bill with requirements for schools receiving federal school choice tax credit scholarship funds (2026)

Democrats in the Colorado House of Representatives introduced HB 26-1292 on Feb. 23, 2026, to establish requirements for schools that would receive funds under the federal school choice tax credit scholarship program beginning in 2027. The provisions included nondiscrimination requirements, specified that the prohibited discrimination applies to admissions, enrollment, academic performance, access to or participation in educational services, and retention, and authorized the Colorado State Board of Education to suspend the eligibility for funds under the program for schools found to be in violation of the statute, among other provisions.

U.S. Education and Treasury Departments issue joint fact sheet (2026)

The U.S. Department of Education and the U.S. Department of the Treasury issued a joint fact sheet on January 27, 2026, detailing the program. It included a list of 23 states that had formally opted into the program as of January 27, 2026.

Montana governor formally opts state into program (2026)

Montana Governor Greg Gianforte (R) announced on January 21, 2026, that he formally opted the state into the federal school choice tax credit scholarship program.

Georgia governor formally opts state into program (2026)

Georgia Governor Brian Kemp (R) announced on January 20, 2026, that he formally opted Georgia into the federal school choice tax credit scholarship program.

Arizona governor vetoes bill that would've required state to participate in program (2026)

Arizona Governor Katie Hobbs (D) vetoed SB 1106 on January 16, 2026, which was a budget bill that, among other provisions, would've required Arizona to participate in the federal school choice tax credit scholarship program.

Mississippi governor formally opts state into program (2026)

Mississippi Governor Tate Reeves (R) announced on January 19, 2026, that he formally opted the state into the federal school choice tax credit scholarship program.

Alabama governor signs executive order signaling participation in federal school choice tax credit scholarship program (2026)

Alabama Governor Kay Ivey (R) signed Executive Order No. 742 on January 16, 2026, signaling the state's participation in the federal education tax credit scholarship program.

Virginia becomes first state to formally opt into program (2026)

Virginia Governor Glenn Youngkin (R) announced on January 9, 2026, that the state had officially elected to participate in the U.S. school choice tax credit scholarship program, effective January 1, 2026. To officially opt in to the program, states must fill out and submit IRS Form 15714 and submit a list of qualified scholarship-granting organizations (SGOs). Virginia submitted a list of eight SGOs; two were statewide organizations, and six were national organizations. Youngkin said the list may be updated as federal guidance is issued.

Nebraska governor signs executive order signaling participation in federal education tax credit scholarship program (2025)

Nebraska Governor Jim Pillen (R) signed Executive Order 25-14 on September 29, 2025, to signal the state's participation in the federal education tax credit scholarship program. Nebraska was the first state to take official action signaling participation in the program.

North Carolina governor vetoes bill opting into federal education tax credit scholarship program (2025)

North Carolina Governor Josh Stein (D) vetoed the Educational Choice for Children Act on August 6, 2025, which was designed to opt the state into the federal private school choice tax credit program. The North Carolina Senate passed the Educational Choice for Children Act 30-19 along party lines on July 29, 2025, with Democrats opposing it and Republicans supporting it. The North Carolina House of Representatives passed it 69-47 on July 30, 2025, with one Democrat joining all Republicans supporting it, and all other Democrats opposing it. Stein said in his veto message that he planned to opt the state into the program once the federal government issued what he called sound guidance for the program.

See also

Other school choice-related content:

• Impact of school choice on rural school districts
• States with and without universal school choice programs
• School choice in the United States
• School choice glossary
• Policy and reform proposals related to the impact of school choice on rural districts
• Arguments about the effects of universal school choice on rural school districts
• Case studies on legislative support for and opposition to universal school choice legislation (2023-2024)
• State-by-state analysis of legislative representation
• U.S. school choice tax credit scholarship program

Other education policy content

• Public education in the United States
• K-12 education content standards in the states
• K-12 curriculum authority, requirements, and statutes in the states