Education freedom tax credit marks new era for school choice

The education freedom tax credit is one step closer to becoming a reality for families. Established in tax law last year, the credit now has a road map, with the Treasury Department’s new rules giving clear guidance on how to participate when giving begins Jan. 1. Here’s what was made clear in newly released Treasury guidance: governors can now designate scholarship granting organizations, or SGOs, within their state; SGOs have new rules for implementation that will ensure compliance, reporting, and program integrity; and taxpayers have greater clarity on giving ahead of the 2027 launch.Notably, with the framework now clear, remaining governors have the answers needed to opt in and make this opportunity available for families in their states — and they should act now. To date, 31 states plan to participate, but nearly 21 million students are still left behind. If every state and Washington, D.C., opt in, an estimated 52 million children will be scholarship-eligible.The new guidance provides a strong foundation for the education freedom tax credit’s success by answering several important questions about how the credit will work in practice and giving families a chance to weigh in. For families, these rules are about much more than tax policy. They are about closing a gap where, too often, a child’s ability to succeed has been limited by ZIP code or income.The education freedom tax credit is a new avenue that can open the doors of education freedom for children by giving people a pathway to support K-12 scholarships while reducing their tax liability.Beginning in 2027, taxpayers can contribute to a qualified SGO and receive a dollar-for-dollar federal tax credit of up to $1,700 each year. SGOs like the AFC Scholarship Fund will then use those contributions to provide scholarships for eligible K-12 students, particularly to serve families in need.An estimated 121.5 million taxpayers could be eligible to claim the credit in 2027. At just 10% participation, giving could generate nearly $19 billion in new K-12 education funding. At 20% participation, the nearly $38 billion raised would exceed federal spending on Title I and special education combined. That’s the power of the education freedom tax credit: its reach can grow with every taxpayer who chooses to participate. OUR INNER-CITY PUBLIC SCHOOLS SUCK, AND THE DEMOCRATS DON’T CAREThe tax credit’s launch is just the beginning, and governors, SGOs, and taxpayers will each have a role in what comes next. If Americans embrace this opportunity, the education freedom tax credit will make educational freedom a reality for millions of families — ushering in a new era of school choice across the country and a golden age in American education, perhaps like never before. Ashling Preston is the director of federal affairs at the American Federation for Children.