School Choice Advocates Welcome Trump’s Private School Tax Credit
School choice and Christian education advocates are lauding an unprecedented provision buried in the 1,116 pages of the One Big Beautiful Bill Act signed into law on July 4 by President Donald Trump.
However, questions remain about the first-ever federal private school tax credit as states consider whether to opt into the program.
“This legislation promises generational change. It will provide thousands of American children, especially those from underserved communities, access to a better future,” said ACE Scholarships CEO Norton Rainey in an interview with The Washington Times. The Colorado nonprofit focuses on making private school affordable to low-income families.
Under the new provision, the Education Choice for Children Act, taxpayers will be able to receive a dollar-for-dollar tax credit for up to $1,700 in donations made to educational nonprofits, starting in 2027.
The nonprofits must use the donations to fund private K-12 education scholarships, which can cover tuition, boarding, books and other student expenses. The scholarships can support traditional students as well as homeschoolers, who can use the money for such expenses as curricula and tutoring.
To be eligible for a scholarship, students must belong to a household with an income at or below 300% of their local median gross income. This income bracket includes a large majority of U.S. families. The act sets no limit on who can get the tax credit, so long as they reside in a participating state. It remains unclear how the $1,700 limit will apply to couples who file joint tax returns.
“The OBBB included a very big win for Christian education with passage of the flagship school choice law,” the Association of Christian Schools International (ACSI) announced in a July 8 memo.
Written by ACSI’s Public Policy and Legal Affairs Team, the memo encouraged schools to “prayerfully and responsibly” consider whether to participate in the program. It noted that the scholarships are not equivalent to federal financial assistance, and it suggested that if any religious liberty lawsuits arise, “a school is reasonably likely to succeed.”
The ASCI also praised the removal of an “unfunded mandate,” which had been in the House version, for private schools to fulfill individualized education plans for students with special needs.
However, the ACSI noted some potential drawbacks.
The memo lamented the deletion of religious liberty language that strongly affirmed the rights of participating schools, families and education nonprofits. It also criticized as “baffling” the inclusion of an annual opt-in requirement for states.
Also, because the credit is capped at $1,700, education nonprofits may need to draw on an enormous pool of donors to adequately fund scholarships. The average private school charges $14,913 for one year’s tuition, according to Private School Review. Costs vary widely from school to school and from state to state. South Dakota, for example, has an average tuition of just $6,477.
“Of course, a donor may give a million-dollar gift, but that donor will receive a tax credit only on the first $1,700,” the ACSI memo said.
Robert Enlow, CEO of advocacy group EdChoice, praised how the OBBB “paves the way for new school choice opportunities,” but cited limitations. States that are most in need of school choice options are unlikely to opt in to the program. Among those that do opt in, the requirement that eligible education nonprofits be approved by the state could affect the program’s practical impact.
“For all its ambition, the final result lands somewhere in the middle,” Enlow said on the EdChoice blog. “Congress swung for the fences on school choice — and hit a single.”
Opponents of the provision expressed concerns about the loss of tax revenues.
“The lack of an aggregate cap on the tax credit creates the possibility that this policy could carry an immense price tag,” warned Institute of Taxation and Economic Policy Research Director Carl Davis in a blog post.
“If all 59 million taxpayers chose to claim the credit, the cost to the federal government would be $101 billion per year — making it one of the largest tax cuts in the entire bill,” Davis said. “Official estimates released by Congress’s Joint Committee on Taxation place the revenue cost at around $3 to $4 billion per year, with costs rising over time as more families get into the habit of using this tax credit.”
A June survey conducted by Mclaughlin & Associates and commissioned by The Club for Growth showed strong bipartisan support for an education tax credit. Four in five parents of K-12 students said they supported the tax credit, which at the time of the survey was capped at $10 billion, while 82% of voters agreed that “every parent in America should be empowered to send their child to the public, private, charter, or faith-based school of their choice.”
This piece is republished from MinistryWatch.
Tony Mator is a Pittsburgh journalist, copywriter, blogger and musician who has done work for World magazine, The Imaginative Conservative and the Hendersonville Times-News, among others. Follow his work and observations at twitter.com/wise_watcher.