The Trump administration is launching its federal school choice program, the Education Freedom Tax Credit, on January 1. The program, part of a tax and spending bill passed in 2025, aims to provide taxpayer-funded scholarships for K-12 education of a family's choice.
Under the program, individuals and organizations can donate to non-profit Scholarship Granting Organizations (SGOs) to fund student scholarships. These scholarships can cover tuition, academic services, supplies, and other costs associated with public, private, or homeschooling options. The federal government will reimburse the SGOs for these expenditures.
The Treasury Department and the IRS estimate the program will cost approximately $26 billion annually and could fund up to 2.2 million scholarships each year by 2030. The initiative offers a dollar-for-dollar tax credit of up to $1,700 for individuals or $3,400 for married couples filing jointly who donate to SGOs.
Officials state that the program is designed to meet the needs of individual students. Education Secretary Linda McMahon said that education freedom is key to unlocking opportunity and that the program ensures children have access to the education they need, free from limitations imposed by ZIP code, income, or government barriers.
Eligibility for families is tied to county or metro area median income, adjusted for family size, with limits set at three times the median income. Approximately 96% of children in participating states are expected to be eligible for scholarship funds.
Public school advocates have voiced concerns that the program could divert funding away from public schools towards private institutions. Representative Gwen Moore (D-Wis.) has criticized the tax credit, arguing that it represents a direct financial transfer from the Treasury to private school entities rather than an investment in public education.
States have until February 15 to submit their lists of SGOs, with a 60-day comment period preceding the program's final implementation. Many Republican-led states have already indicated their intent to participate, while Democratic governors in states like North Carolina, Virginia, Colorado, and New York are also reportedly planning to opt in, despite potential concerns about the program's impact on public school funding. These governors must decide whether to participate by January 1, or risk losing potential federal funding.
"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," said Narric Rome, managing director for government relations at the nonprofit Accelerate.