Updated: This tracker has been updated with comments from governors in response to the IRS’ release of regulations governing the federal scholarship tax credit program.
State officials must decide if they’ll participate in the first major federal program that bankrolls K-12 scholarships for private schools and a range of expenses at public schools through the tax code.
Congress included a tax-credit scholarship in the One, Big Beautiful Bill Act, allowing taxpayers to claim tax credits in exchange for donations to organizations that grant private school scholarships and scholarships covering some expenses tied to public schools, such as tutoring and after-school programs.
Until now, all major school choice programs have been state-level initiatives. But the federal tax-credit scholarship forces all states and the District of Columbia to decide on school choice, whether they currently have a choice program of their own or don’t.
State decisions on opting in so far
Under the new law, individual taxpayers can claim a dollar-for-dollar tax credit for up to $1,700 in donations to nonprofit organizations that award scholarships so K-12 students can attend private schools. Scholarships can also pay for some expenses tied to public schools, with the law naming tutoring, technology, uniforms, and extended-day programs.
Students whose family income does not exceed 300% of their area’s median gross income—a threshold that ranges from families earning more than $500,000 in Westchester County, N.Y., to about $114,000 in Wolfe County, Ky.—are eligible to receive scholarship funds as long as their state opts into the scholarship program. The federal law does not specify the size of scholarships awarded.
The scholarships could cover a range of expenses. In addition to tuition at private schools, including religious schools, they could pay for tutoring, school uniforms, technology, after-school programs, transportation, and services for students with disabilities. Scholarships can cover “a broad set of expenses incurred in connection with or required by any K-12 public, private, or charter school,” the U.S. Department of Education said in a January 2026 fact sheet on the program.
Taxpayers can claim credits starting in the 2027 tax year, and the Internal Revenue Service on Dec. 12, 2025, formally launched the process allowing states to opt into the program. The Department of the Treasury on Oct. 1, 2026, released temporary regulations to govern the program’s first year and proposed rules for the program to be finalized later on.
The law generally charges governors with deciding whether to enroll their states in the program, but lawmakers in some states have taken action to enroll their states, overriding governors’ vetoes in Kansas, Kentucky, and North Carolina.
To date, all but one Republican-led state has taken action to opt in. Republican governors expect to use the federal offering to complement their own state programs or, in the few Republican-led states without private school choice, to create their own.
Democratic governors have been more skeptical, with many saying in early October 2026 that they’re still in the process of reviewing the federal regulations before deciding. A handful have said they’re looking into how the funding could help low-income students or support public school students.
Partisan breakdown of state decisions
Read Education Week’s coverage of the federal school choice program
- What Is the Federal Scholarship Tax Credit, and How Does it Work?
- New Rules for Federal School Choice: What You Need to Know
- How Can Public Schools Participate in Trump’s Federal Choice Program?
- An Expert Explains How the Federal Scholarship Tax Credit Will Work (Opinion)
For more information on state private school choice programs, visit our tracker of state programs.
Contact information
For media or research inquiries about this data, contact library@educationweek.org.
How to cite this page
Federal School Choice: Which States Are Opting In? (2025, Aug. 27). Education Week. Retrieved Month Day, Year from https://www-edweek-org.ezproxy.baylor.edu/policy-politics/federal-private-school-choice-which-states-are-opting-in/2025/08
