Dive Brief:
- The U.S. Department of the Treasury and the Internal Revenue Service are allowing an early opt-in process for states to participate in the new federal school choice program that begins in 2027.
- According to a notice posted Dec 12, starting on or after Jan. 1, 2026, states may submit a form indicating they want to opt into the federal tax credit scholarship program that will allow federal taxpayer donations to be spent on K-12 services, including private school tuition and public school expenses.
- The controversial program, which was included in the Republican-led “One Big, Beautiful Bill,″ has supporters eager to expand school choice options — though opponents say it will harm public school finances and contribute to inequities in education.
Dive Insight:
The early opt-in process, called advanced election, is being provided so the scholarship granting organizations that will manage and distribute the taxpayer donations can prepare for the tax credit program's launch on Jan. 1, 2027, according to the notice from the Treasury Department and the IRS.
There is not yet a deadline for advanced election submissions, and the agencies said more details on the process will be forthcoming.
Earlier this month, the agencies opened a public comment period to get input about several factors, including the policies and procedures guiding SGOs. The deadline for that comment period is Dec. 26. Information from those comments will be used to develop a proposed rule, which will provide the public another opportunity to comment.
The new law allows any individual taxpayer, beginning on Jan. 1, 2027, to donate up to $1,700 annually to a scholarship-granting 501(c)(3) organization. Donors could then be eligible for a 100% federal income tax credit for their contributions.
The funds generated could be used toward private school tuition at secular and religious schools, homeschooling materials and expenses at public or private schools. Student eligibility for scholarships is based on a household income up to 300% of an area’s median income, as defined by the U.S. Department of Housing and Urban Development.
Possible household income limits range from $585,600 in California's San Jose–Sunnyvale –Santa Clara area to $113,100 in South Dakota's Pine Ridge Reservation region, according to a reference map created by Doug Geverdt, a retired data program manager at the National Center for Education Statistics.
But only students living in a state that opts in will be eligible for a scholarship. While several states including Texas and Nebraska have already made announcements that they will participate, others including Wisconsin and Oregon have said they won’t be doing so, according to Ballotpedia and news sources.
