Federal voucher program: what it means for public schools nationwide

Following the voucher program introduced in Texas, many may be unaware of the federal voucher program introduced in President Trump's “One Big Beautiful Bill,” which many Democratic governors are expected to opt into by the end of 2026. The voucher program – which goes by the name of the “Education Freedom Tax Credit” – provides a backdoor for families to use a tax credit for private school tuition. The aim of this program is to encourage private contributions to participate in Scholarship Granting Organizations (SGOs) that will distribute monies largely unchecked by the feds and with little to no state input. 

Through this credit, taxpayers will be allowed to donate up to $1,700 ($3,400 married filing jointly); those funds can then go towards providing scholarships to elementary and secondary school children. States have the ability to decide whether to opt for this program or not. However, taxpayers are allowed to contribute to eligible SGOs regardless of whether their state participates in the program. They will receive a dollar-for-dollar credit toward their tax obligation. 

The IRS and Treasury Department both estimate that this program could support 600 to 700 SGOs, with over 11 million taxpayers contributing approximately $26 billion annually. 

The proposed regulations focus on:  

• Increasing Access for Students: The proposed regulations would ease eligibility checks for low-income families, foster youth, and special-needs students by ignoring non-cash assets such as home equity. 

• Expanding Educational Choice: The proposed regulations would prohibit states from adding restrictive rules on SGOs regarding school choice, expense coverage, or arbitrary exclusions. Ironic coming from the side that champions states’ rights. 

• Expanding Opportunities for Scholarship Organizations and Families: The proposed regulations set up frameworks for multistate SGOs and offer operational safe harbor if 85% of the funds go towards scholarships. 

• Ensuring Taxpayers Can Access the Maximum Credit Allowed by Law: The proposed regulations outline rules for claiming the maximum credit when combining state and federal benefits, allows a 5-year credit carry-forward, and provides an official IRS SGO list. 

• Protecting Taxpayers and Scholarship Funds: The proposed and temporary regulations implement IRS portals, unique donor IDs to protect Social Security numbers, and annual audits to prevent duplicate or improper payments. 

But the implications of this program to further the divide between wealthy schools and under-resourced schools must be acknowledged. The proposed rules fail to mention that school districts would have to begin charging fees for classes and extracurricular activities, which undermines the principle that public schools must be free-of-charge. Because of this, the program directly assists private schools, which are already legally allowed to charge tuition for attendance.  

So far, 15 governors remain undecided, but have a little over a month to make a final decision on the program. Let’s be clear: this is a federal voucher program disguised as a tax credit. The language of ‘tax credits’ makes the program more palatable since school choice itself is a politically controversial topic.  We highly encourage anyone that believes this program will put them or their child at a disadvantage to comment their concerns regarding these rules online.