Trump Administration Moves Ahead With Major School Choice Tax Credit Program

The Trump administration is preparing to launch a major new federal school choice program that could give millions of American families more control over where and how their children are educated.

Officials from the Treasury and Education departments released proposed rules Thursday for the Education Freedom Tax Credit, a new program scheduled to begin Jan. 1. Supporters say the plan could “supercharge” education by putting scholarship money closer to students and families instead of locking it inside one-size-fits-all school systems.

The program was passed into law in 2025 as part of the Republican tax and spending package. It creates a permanent federal tax credit for donations to nonprofit Scholarship Granting Organizations, or SGOs. Those organizations would then provide K-12 scholarships that families could use for a wide range of educational needs.

That includes private school tuition, tutoring, academic services, school supplies, public school expenses, homeschooling materials, and other education-related costs.

In other words, the money follows the student.

The Treasury Department and IRS estimate the program could cost around $26 billion annually and fund as many as 2.2 million scholarships each year by 2030.

Supporters argue that is exactly the point. Instead of protecting institutions first and asking families to take whatever they are assigned, the new program gives parents more options and gives students a better chance to find the school or educational setup that actually works for them.

The tax credit is worth up to $1,700 for individuals and up to $3,400 for married couples filing jointly who donate to approved SGOs. The credit is dollar-for-dollar, meaning eligible donors can reduce their federal tax liability by the amount they contribute, up to the program limit.

Education Secretary Linda McMahon praised the program as a major step toward expanding opportunity.

“Education freedom is the key to unlocking opportunity and success for our next generation of students,” McMahon said in a statement to ABC News.

“I am profoundly grateful to President Trump and our partners at Treasury for ensuring that every child has access to the education they need, not one limited by ZIP code, family income, or government-imposed barriers,” she added.

The administration says the program is designed to help students in multiple education settings, not only those attending private schools. Families could use scholarship funds for private school tuition, but also for books, supplies, academic support, homeschooling needs, and services connected to public school enrollment.

That flexibility is one of the program’s biggest selling points. A struggling student in a public school could get tutoring. A homeschool family could buy curriculum. A child trapped in a failing school could receive help transferring somewhere better. A family that could never afford private tuition might suddenly have a door open.

Under the proposed rules and safe harbors, about 96% of children in participating states would be eligible for the scholarship funds, according to federal agencies. Income eligibility would be capped at three times the median income for the family’s county or metro area, adjusted for family size.

The program also puts pressure on governors, especially skeptical Democratic governors, to decide whether they want their states to participate. States must opt in for families to be eligible, and governors who refuse could leave millions of dollars in education support on the table.

Several Republican-led states have already moved to participate. Democratic governors in North Carolina, Virginia, Colorado and New York have also indicated they will opt in.

That bipartisan movement is notable. Even critics of school choice may find it difficult to explain why families in their states should be denied access to scholarship money available elsewhere.

Public school advocates argue the program could direct money away from traditional public schools and toward private education. Rep. Gwen Moore, D-Wis., has criticized the credit, saying it amounts to a “direct pull from the treasury” for private schools.

But supporters counter that the current system already spends enormous sums of taxpayer money while too many families remain trapped in schools that do not meet their children’s needs. They argue that education funding should serve students, not bureaucracies.

Narric Rome, managing director for government relations at the education nonprofit Accelerate, described the program as a major shift in K-12 education funding.

“It will be the largest budgetary shift for K-12 [education] certainly in 11 years,” Rome told ABC News.

“For some states, and for some parts of the country, this is a ‘Help is on the way,’ and for others, it’s a concern of where are their dollars going and are they going to the students that need it the most,” he said.

That debate will continue as the program moves through a 60-day comment period before final implementation. Donations are scheduled to begin Jan. 1, while states have until Feb. 15 to submit their lists of approved SGOs.

For parents who feel ignored by the education establishment, the program could be a game-changer. It does not abolish public schools. It does not force families into private schools. It simply gives more families a say in how education dollars are used for their own children.

For decades, parents have been told that their child’s education is determined by their ZIP code, their income, and the government school assignment map.

The Trump administration’s new school choice tax credit challenges that model directly.

And for millions of families, that could be very good news.

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