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The Treasury Department and IRS released proposed rules for a new federal school-choice program, which would help teachers cover K–12 education expenses.
How does it work?
The program, called the Education Freedom Tax Credit, offers taxpayers a dollar-for-dollar federal tax credit for donations to approved scholarship organizations, which then distribute the money to eligible students.
The credit is capped at $1,700 per taxpayer per year, or up to $3,400 for married couples filing together.
It’s also nonrefundable, meaning it can erase taxes owed but won’t produce an extra refund.
What do the scholarships cover? They can be used for a pretty wide range of expenses, including private-school tuition, tutoring, special-education services, books, supplies, computers, some after-school programs, and more.
It could help quite a few kids: The Treasury Department estimates the program could bring in roughly $26 billion a year by 2030, enough to fund 2.2 million scholarships per year. And with about 96% of students in participating states potentially meeting the income limit, eligibility could be extremely broad.
/ Why should you care? The program could give eligible kids access to things their families might not otherwise be able to afford, which could mean a chance to move to a different school, get extra academic help, or receive specialized support that better fits their needs.
