News - A new tax credit is set to reshape the landscape of school choice by 2027.

In a groundbreaking move set to take effect on January 1, 2027, a new federal tax credit will enable Americans to redirect up to $1,700 of their federal income taxes toward K-12 scholarships, contingent upon governors opting into the program. Embedded in President Donald Trump’s One Big Beautiful Bill Act, this initiative introduces the first federal credit of its kind, offering dollar-for-dollar tax benefits for contributions to state-sanctioned scholarship organizations that assist low- and middle-income families. This Federal Scholarship Tax Credit is poised to alter the educational funding landscape significantly. The approach hinges on states' participation, with governors required to submit lists of eligible Scholarship Granting Organizations (SGOs) to the Treasury, allowing residents to support these entities and avail themselves of the credit. Importantly, should a governor decline to participate, residents could still benefit by contributing to eligible organizations in other states under IRS provisions. Endorsers, such as Norton Rainey, CEO of ACE Scholarships, assert that this initiative presents a win-win scenario for states, families, and the nation, provided governors agree to participate. However, critics, including major teachers unions and left-leaning policy groups, argue it could divert essential funds from public schools, representing a de facto voucher system that privileges wealthier families. Estimates suggest the program could channel tens of billions annually from federal to private and religious educational settings, with daunting impacts on conventional education budgets. Despite resistance, noteworthy Democratic figures like Colorado's Gov. Jared Polis, historically supportive of school choice, have indicated willingness to engage, highlighting ideological divides. ACE Scholarships, strategically positioning itself for this eventuality, stands as a seasoned veteran in managing such programs, extending its 25-year expertise and robust scholarship management capabilities to seize this historic opportunity. The stakes are high, as advocacy for this initiative underscores potential benefits for numerous neglected students stuck in underperforming public schools. Rainey maintains that empowering parental choice fosters better educational outcomes, dubbing the forthcoming tax credit a pivotal moment for nationwide reform. With all states capable of participation, the program's success hinges on governors' choices, setting the stage for a transformative shift in educational choice and equity across America.