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

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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, originally introduced as the Educational Choice for Children Act (ECCA), was the first federal private school choice policy. 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, 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.

• 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 October 2025. 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 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

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.

States officially participating in the program

This section includes a list of states that have officially opted in to the program and submitted a list of qualified SGOs to the U.S. Department of the Treasury.

As of December 17, 2025, no states have submitted a list of qualified SGOs to the U.S. Treasury.

States that have officially stated whether they will opt in or not

As of December 17, 2025, one state—Nebraska—had elected to participate in the program. The table below includes all states that have made an official move to participate in the tax credit program, whether successful or not.

Official action

State	Official action	Status	Date
Nebraska	Executive Order 25-14	Adopted	September 29, 2025
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.

Texas

• Governor Greg Abbott said on December 10, 2025, that Texas 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.

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.

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.

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 said they will introduce legislation to opt into the program.

Arguments about the federal education tax credit scholarship program

This section contains arguments about the nature of the program, arguments in support of state participation, and opposition to state participation.

Arguments about the program

• The program is too expensive.

  This argument says that since there's no national financial cap on the program, it has the potential to cost up to $170 billion of federal tax revenue per year, and that is too much.

• The program reallocates federal funds from other programs that need money.

  This argument says that while the program is not directly federally funded, it allows taxpayers to reallocate where their tax money goes, and will move money away from public services that need money.

• Using federal funds to subsidize private school education could subject private schools to more regulation.

  This argument says that as more public money is used to subsidize or pay for more private schools, the less institutional autonomy private schools are likely to have.

Support for opting in to the program

This section details arguments that support state participation in the program.

• This program can provide public school students with extra resources.

  Supporters argue that since the OBBB allows scholarships to be used for public school expenses, public school students could augment their education with resources to help them succeed.

• This program allows low-income families the chance to choose a school that best fits their needs.

  Supporters argue that this program gives public funds to families who cannot afford to choose a school other than public options.

• The program does not take funds away from public schools.

  Supporters of this program say this program does not divert public state or federal funds away from education, and that it is funded by private donors. They say the only cost is lost federal income tax revenue.

• Instead of opting out of the program, those against school choice should tailor the program to benefit students they believe school choice harms.

  Supporters of this program say that while the program's opponents believe it harms low-income, Black, or Latino students, those opponents should help shape the program to best serve those students.

• Scholarships can benefit students in all educational sectors at no expense to state governments.

  Supporters of the program argue that since the federal government gets a decrease in tax revenue from this program— not state governments— states stand only to gain from the program.

• If states don't opt in, their students lose extra resources and educational opportunities.

  Supporters of this program say that while donors still receive a federal tax credit if their states don't opt in, students will not receive extra resources and opportunities that the program provides. They say that states that don't opt in only hurt their students and that not opting in deprives students of opportunities.

• Opting in to the program would help states address poor student performance

  This argument says that the federal school choice tax credit is an opportunity for states to address falling student achievement.

Opposition to opting in to the program

This section details arguments that oppose state participation in the program.

• This program disproportionately benefits the wealthy.

  Critics argue that since the program applies to families earning no more than 300% of the area's median gross income, this could include wealthy families in wealthy areas.

• This program diverts funds from public schools.

  Critics argue that by incentivizing scholarships for private school educational expenses, this program will divert funds from public schools with declining enrollment due to private options becoming accessible.

• The federal education tax credit scholarship is unconstitutional.

  Critics argue that the U.S. Constitution gives the federal government specific, enumerated powers that do not include education, and that this program constitutes federal overreach.

• The statute did not contain enough accountability measures for SGOs.

  Critics argue that the statute is vague and does not establish enough accountability measures for SGOs, and that the program will be rife with fraud as a result.

• Opting in to the program gives the federal government too much say in school choice.

  Those opposing state participation in the federal program argue that, on the surface, the program seems like it affords states flexibility in receiving more funding for school choice. They argue that by establishing requirements for SGOs, the federal government can control where the funding goes, and that it will use the program to advance social policy goals.

• The tax credit will lead to worse educational outcomes for students.

  This argument says studies show school choice programs have a detrimental impact on student academic outcomes.

Noteworthy events

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

Nebraska governor opts into federal education tax credit scholarship program

Nebraska Governor Jim Pillen (R) signed Executive Order 25-14 on September 29, 2025, to opt into the federal education tax credit scholarship program. Nebraska was the first state to officially opt in to the program.

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

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

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