This bill matters because it would create a new federal incentive for private investment in K-12 education, potentially shifting how some educational resources are funded. If passed, it could significantly expand access to various educational choices—from private schools to specialized therapies and homeschooling supplies—for families across the country.
For voters, this bill represents a change in how educational opportunities are supported. If it becomes law, it could lead to more students attending non-public schools or utilizing private educational services, which proponents argue offers greater flexibility and choice. If it doesn't pass, the current system of educational funding and access, primarily through public schools supplemented by existing state and private programs, would remain largely unchanged.
KEY PROVISIONS
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PROVISION 01
Allows individuals to claim a new federal tax credit for charitable donations made to qualifying non-profit organizations that provide K-12 education scholarships.
This provision incentivizes private donations for K-12 education by reducing the donor's federal tax burden.
PROVISION 02
Limits the tax credit amount to the greater of 10% of the donor's adjusted gross income or $5,000 per year, and subjects it to overall volume caps.
These limitations control the potential fiscal impact of the credit and help manage its distribution.
PROVISION 03
Defines 'qualified elementary or secondary education expense' to include a broad range of costs such as tuition, books, online materials, tutoring, test fees, dual enrollment, educational therapies for students with disabilities, and transportation, including for homeschooling.
This broad definition ensures that scholarships can cover diverse educational needs beyond traditional school tuition, supporting various learning environments.
PROVISION 04
Establishes requirements for 'scholarship granting organizations' to be 501(c)(3) non-profits primarily focused on K-12 scholarships, maintaining separate accounts for credited contributions, and prioritizing returning scholarship students.
These rules ensure that the organizations are legitimate and that funds from credited contributions are used for the intended educational purposes.
This bill matters because it would create a new federal incentive for private investment in K-12 education, potentially shifting how some educational resources are funded. If passed, it could significantly expand access to various educational choices—from private schools to specialized therapies and homeschooling supplies—for families across the country.
For voters, this bill represents a change in how educational opportunities are supported. If it becomes law, it could lead to more students attending non-public schools or utilizing private educational services, which proponents argue offers greater flexibility and choice. If it doesn't pass, the current system of educational funding and access, primarily through public schools supplemented by existing state and private programs, would remain largely unchanged.
KEY PROVISIONS
AI-extracted
high
Allows individuals to claim a new federal tax credit for charitable donations made to qualifying non-profit organizations that provide K-12 education scholarships.
This provision incentivizes private donations for K-12 education by reducing the donor's federal tax burden.
med
Limits the tax credit amount to the greater of 10% of the donor's adjusted gross income or $5,000 per year, and subjects it to overall volume caps.
These limitations control the potential fiscal impact of the credit and help manage its distribution.
high
Defines 'qualified elementary or secondary education expense' to include a broad range of costs such as tuition, books, online materials, tutoring, test fees, dual enrollment, educational therapies for students with disabilities, and transportation, including for homeschooling.
This broad definition ensures that scholarships can cover diverse educational needs beyond traditional school tuition, supporting various learning environments.
med
Establishes requirements for 'scholarship granting organizations' to be 501(c)(3) non-profits primarily focused on K-12 scholarships, maintaining separate accounts for credited contributions, and prioritizing returning scholarship students.
These rules ensure that the organizations are legitimate and that funds from credited contributions are used for the intended educational purposes.
GLOSSARY
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Tax Credit
A dollar-for-dollar reduction in the amount of income tax owed. Unlike a deduction, which reduces taxable income, a credit directly reduces the tax bill.
Adjusted Gross Income (AGI)
Your total income from all sources minus certain deductions, used to determine eligibility for various tax benefits and credits.
Scholarship Granting Organization (SGO)
A non-profit group that primarily provides scholarships to K-12 students for their educational expenses, and which must meet specific rules to qualify for donations that receive the tax credit.
Qualified Contribution
A charitable donation made in cash or marketable securities to an eligible Scholarship Granting Organization that qualifies for the new federal tax credit.
Volume Cap
A specific limit on the total amount of tax credits that can be claimed under this program, either across the nation or within a particular state, during a given year.
Internal Revenue Code (IRC) of 1986
The main body of federal tax law in the United States, which this bill proposes to change.
501(c)(3) organization
ACTION TIMELINE
2 EVENTS
MAY 20, 25
Introduced in Senate
INTROREFERRAL
MAY 20, 25
Read twice and referred to the Committee on Finance.
A type of non-profit organization recognized by the IRS as tax-exempt because it is organized and operated exclusively for charitable, religious, educational, scientific, literary, public safety, or certain other purposes.
