Commentary
Late on Friday, Nov. 13, Virginia Gov. Abigail Spanberger’s office confirmed that she will reverse her predecessor’s decision to join a new federal K-12 scholarship program. Former Gov. Glenn Youngkin had made Virginia the first state to opt in, but The Washington Post reported that an IRS letter showed his administration never completed the process. Her spokesperson said the administration “does not believe this program would benefit students in public schools.”
The law says otherwise. The Post’s coverage didn’t help, calling it “a new federal school voucher program.” Voucher is the wrong word. A voucher is government money: the state hands tax dollars to families for private tuition. This program runs on voluntary private donations to nonprofits. No state spends a dime, and public school students are eligible under the statute.
If you’ve never heard of the Federal Scholarship Tax Credit, you’re in good company. Congress tucked it into last year’s nearly 900-page One Big Beautiful Bill Act, alongside tax cuts, no tax on tips, border funding, and Medicaid changes. The debates over those drowned it out. Yet this provision, which Treasury calls the Education Freedom Tax Credit, may be the most consequential education reform of our time. It goes live on Jan. 1, 2027.
For donors, the credit works like this: give up to $1,700 in cash to an approved nonprofit scholarship-granting organization (SGO), and you get a dollar-for-dollar credit against your federal income tax, or up to $3,400 for married couples filing jointly. If you owe at least that much in federal tax, the gift costs you nothing.
There are five key benefits. First, states pay nothing. A state’s only job is to submit a list of qualifying SGOs, and it must include every organization that meets federal rules. Second, scholarships can pay for public or private school costs, including tuition, tutoring, special education services, books, supplies, and extended-day programs. Donors choose the SGO whose mission they share, from public school tutoring to faith-based schools to special-needs services. Third, almost every family qualifies because the income cap is three times the local median income, a level Treasury says covers about 96 percent of children in participating states. Fourth, support crosses party lines. Democratic Govs. Jared Polis of Colorado and Kathy Hochul of New York have signed on, and Arne Duncan, former President Barack Obama’s education secretary, called opting in “a no-brainer” in an op-ed published by, of all places, The Washington Post.
Finally, the money could be enormous. Treasury and the IRS project that by 2030 more than 11 million donors could give $26 billion a year. As a researcher, I’d caution that estimates vary widely; Congress’ Joint Committee on Taxation projected $3 billion to $4 billion a year. And the evidence Treasury cites is encouraging: 10 of 16 randomized trials found academic gains for some or all students.
Floridians know how this works. Our state’s tax credit scholarship has drawn $9.2 billion from donors over 25 years through the nonprofit Step Up For Students. Its sister organization will administer the federal credit, and the Florida Chamber of Commerce aims to raise more than $250 million through it for public school students. I plan to make my own gift in January.
Anyone in any state can claim the credit by giving to an SGO in a participating state, but only children in participating states can receive the scholarships. That is now Virginia’s fate. Virginians can still claim the credit, but their gifts will fund children in Florida or Tennessee. Education Reform Now, a think tank allied with Democrats for Education Reform, estimated that at 30 percent participation, Virginia students could receive more than $700 million a year.
Where do the states stand as of mid-November?
Likely in: Alabama, Arkansas, Florida, Idaho, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, West Virginia, and Wyoming.
Opted in, but at risk: Virginia shows that an opt-in is only as good as its paperwork. Every participating state must submit its SGO list by Feb. 15, 2027. Alaska, Georgia, Iowa, Nevada, Ohio, and Texas just elected governors from the other party who take office before then, and Colorado’s governor is term-limited. Outgoing Govs. Mike Dunleavy, Brian Kemp, Kim Reynolds, Joe Lombardo, Mike DeWine, Greg Abbott, and Jared Polis can lock in 2027 by submitting their lists before they leave. They should.
Deciding, and need a push: New York and New Mexico have announced they’ll join. California, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, New Jersey, Pennsylvania, Rhode Island, Vermont, Washington, and the District of Columbia haven’t decided. After Jan. 1, no state can join for 2027.
Probably out, but worth the call: Oregon, Hawaii, and Minnesota have said no, and the governors of Arizona and Wisconsin vetoed opt-in bills. Now the first state to opt in is out, too.
Separately, Treasury’s proposed rule would shut out homeschoolers and microschoolers in 28 states. Comments are due Dec. 1 at regulations.gov (REG-117199-25). Homeschooling families should weigh in.
So: if your state is in, plan your January gift and confirm your SGO is on your state’s list. If your state is at risk or undecided, call your governor. If you live in Virginia, ask Ms. Spanberger to reconsider. A child’s options shouldn’t depend on which side of a state line she lives on.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.
