Key facts
- The new education tax credit is expected to fund up to 2.2 million scholarships annually.
- The credit is based on legislation from Senators Bill Cassidy and Tim Scott, and Representatives Adrian Smith and Burgess Owens.
- Centrist education advocates and some moderate Democrats support the credit for services like tutoring and after-school programs.
- Congressional Democrats, teachers unions, and civil rights groups oppose the credit, viewing it as a school voucher program.
- Sens. Mark Kelly and Mazie Hirono, and Reps. Gwen Moore and Suzanne Bonamici, are sponsoring legislation to repeal the credit.
The Trump administration has introduced a new education tax credit, a move that has intensified pressure on Democratic governors. The credit, established by the One Big Beautiful Bill Act and based on proposals from Republican lawmakers including Senators Bill Cassidy and Tim Scott, aims to channel private contributions to scholarship-granting organizations.
The agency estimates that over 11 million taxpayers will contribute a combined $26 billion annually to these organizations. This tax credit is projected to fund as many as 2.2 million scholarships each year, with Education Secretary Linda McMahon stating it would "supercharge those opportunities for millions of children."
Treasury is scheduled to hold a public hearing on the proposed rules on December 15. Key Republican lawmakers who championed the credit include Sens. Ted Cruz and Rep. Byron Donalds.
Some centrist education advocates and moderate Democrats, such as Colorado Governor Jared Polis, have actively lobbied in favor of opting into the program. They believe it can provide valuable services like tutoring and after-school programs for public school students. Arne Duncan, former Education secretary under Obama, stated that "the only way to shape this one and make sure it works for the kids who need it most is to opt in," urging Democratic governors to "leap at the chance to close the gap and own education again."
However, the tax credit faces significant opposition from congressional Democrats, teachers unions, and civil rights groups. They argue that it functions as a school voucher program, diverting public funds to private school tuition. American Federation of Teachers President Randi Weingarten criticized the scheme, stating that "for every precious public dollar funneled to private schools under this scheme... public school parents will be hunting for stray pennies on the floor."
Prior to the rule's unveiling, Democrats in Congress introduced legislation to repeal the tax credit. Senators Mark Kelly and Mazie Hirono are leading a Senate bill, while Representatives Gwen Moore and Suzanne Bonamici are sponsoring a House measure.