RESOLVING THE LEDGER
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0 Share Newsweek is a Trust Project member See more of our trusted coverage when you search. Prefer Newsweek on Google to see more of our trusted coverage when you search. Nearly 52 million children could qualify for scholarships through a new federal education tax-credit program scheduled to begin in 2027, according to a new analysis released by the American Federation for Children .
The school choice advocacy group, which supports the Trump administration 's Education Freedom Tax Credit, estimates that 51.7 million students, about 91.7 percent of children nationwide, meet the program’s income and other eligibility requirements. However, more than 20 million live in states that have not yet agreed to participate, meaning their access to the scholarships may depend on action by state officials.
The Education Freedom Tax Credit, or EFTC, was signed into law last summer and is also known as the Educational Choice for Children Act. It allows taxpayers to receive a federal income tax credit for donations to approved organizations that provide scholarships to eligible students.
Beginning January 1, 2027, individuals will be able to donate to qualified scholarship granting organizations, known as SGOs, and receive a dollar-for-dollar federal tax credit of up to $1,700.
Families earning no more than 300 percent of the median gross income in their area may be eligible to receive scholarships. The money can be used for a range of qualifying educational expenses, including private school tuition, tutoring and certain secondary-school career training costs.
"For some families, this could mean using scholarships to pay for private school tuition at a school they choose," the Education Department said in a fact sheet regarding the credit. "Other students will benefit from buying the equipment or uniforms needed for a career training program at a secondary school. Other families may seek a scholarship for tutoring or for after- school enrichment programs. The options are expected to vary in line with students’ unique academic needs, the focus of a particular SGO, and the educational opportunities available to students."
The credit will be nonrefundable. It can reduce the amount of federal income tax that a donor owes, but taxpayers will not receive the remaining value as a refund if the credit is larger than their tax bill. Unused credits can generally be carried forward for as long as five years.
Donations made in 2027 would be claimed when taxpayers file their federal returns in 2028.
The American Federation for Children’s analysis found that at least 85 percent of students would be eligible in every state and the District of Columbia.
Eligibility ranged from 85.9 percent in Washington, D.C., to 96.2 percent in Maine. In 34 of the country’s 51 state-level jurisdictions, at least 90 percent of students met the relevant criteria.
The estimate includes children attending public and private schools , as well as eligible homeschooled students in 22 states.
More than half all potentially eligible children live in 10 states. California has the largest number, with an estimated 5.9 million, followed by Texas with 5.5 million, Florida with 3.2 million, New York with 2.7 million and Illinois with 1.9 million.
Together, the 10 states with the largest eligible populations account for approximately 54 percent of the national total—though not all of these states have opted in.
Although eligibility is based partly on federal criteria, states must take action before scholarship organizations can operate within their borders under the program.
A governor or another designated state authority must submit an annual list of qualifying SGOs to the Treasury Department by January 1. The organizations would then distribute scholarships to students.
Thirty-one states have now opted in or signaled that they intend to participate, according to the American Federation for Children. Those states are home to an estimated 30.9 million eligible children, representing approximately six in 10 of the national total.
The number has risen since June, when 27 states joined or announced plans to participate.
"It’s encouraging to see that 27 states have already signed up to participate in this program that promotes and supports elementary and secondary education," IRS CEO Frank J. Bisignano said in a statement that month. "We are hopeful that additional states will decide to participate."
The remaining 20.8 million eligible children live in 19 states and the District of Columbia that have not opted in. Those jurisdictions include California, which has the largest potentially eligible student population.
Taxpayers in nonparticipating states would still be able to claim the federal credit, but only by donating to scholarship organizations serving students in states that have opted in.
Students in states that decline to participate will not be eligible for scholarships through the program, although donors living in those states may still claim the federal tax credit.
Without additional states opting in by the beginning of 2027, the analysis says more than 20 million potentially eligible students may lack access to scholarships for tutoring, special education services, transportation and other qualifying costs.
Many of the states that have not yet opted in have not provided reasoning for not doing so. Other states have offered explanations.
Wisconsin Gover n or Tony Evers argued the program amounts to the first major federal effort to channel public money toward private-school tuition through the tax system.
"The 'Big Beautiful Bill' created the first major federal program to effectively redirect public funds to private school tuition through tax incentives. It is the first-ever federal effort to fund private school scholarships through vouchers the federal government will pay individuals in exchange for donating to organizations that award scholarships to attend private schools," Evers said.
"Put another way, the ...
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