Starting next year, individuals in participating states can redirect up to $1,700 in federal taxes toward K12 scholarships, a system experts say could simultaneously bring new money to public school programs while eroding student enrollment.
Last week, the U.S. Department of the Treasury previewed rules for the , a provision of the Working Families Tax Cuts signed into law last year and part of the Trump administration’s school choice expansion effort.
On Jan. 1, individual taxpayers will be eligible for a dollar-for-dollar tax credit for contributions to scholarship-granting organizations, which can then use the funds to distribute scholarships that cover private school tuition, tutoring, special education programs, and other qualifying expenses.
Scholarship recipients are eligible if their household income falls at or below 300% of their area’s median gross income.
The Treasury estimates that the program could generate $24 billion in scholarship funding annually, with each billion potentially supporting tutoring for more than 300,000 students or funding tuition at a school of choice for 77,000 students.
“The positive benefits are a function of the improved incentive structure that education choice creates, giving parents more control in how their children are educated,” reads a from the Treasury.
But Education Freedom Accounts have created a conundrum for some state leaders, Marguerite Roza, director of Georgetown University’s Edunomics Lab, recently told District 91看片istration.听While public schools could receive funding for tutoring, transportation, and AP test fees, the choice program could further drain enrollment.
This tension has made some鈥攂ut not all鈥擠emocrat-led states reluctant to enroll, Roza added.
Of the 30 states that have joined the program, are Democrat-led. Last month, New York Gov. Kathy Hochul to opt in, representing a major shift in the school choice movement.
State-led school choice remains dominant
Meanwhile, school choice legislation is proving successful in states like Texas, which saw a historic first-year rollout of its program.
The state has awarded more than 102,000 students Freedom Accounts for the 2026-27 school year, according to the , a school choice advocacy organization. During the inaugural application period, the Texas Comptroller’s Office received more than 274,000 applications, marking the largest launch of a school choice program.
However, voucher programs often cost far more than states’ initial projections, the Center on Budget and Policy Priorities argued in a . As state budgets tighten, lawmakers are reconsidering support for such costly initiatives.
In many cases, voucher programs benefit families who are already enrolling their children in private schools. In 2023, after Florida removed the income limit for its choice program, 84% of new voucher recipients were already enrolled in private schools. This was also the case in Alabama, North Carolina, Iowa, New Hampshire, South Carolina and Arkansas.
Florida lawmakers expect to set up to $4.5 billion aside for the state’s “Family Empowerment Scholarship” voucher program, the reported. This comes after of the program in November revealed millions in overspending for scholarship funds.
Mississippi Senate leaders in February the state House’s signature voucher expansion proposal, citing concerns about new annual costs of up to $400 million and little accountability for private schools, according to Mississippi Today.
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