The new Education Freedom Tax Credit will make taxpayers eligible for a credit up to $1,700 for qualified contributions made to organizations that fund scholarships for low- and middle-income students.
By incentivizing these contributions, the new tax credit will make school choice programs more accessible.
“Education is best overseen by the people closest to every student, and the Education Freedom Tax Credit makes school choice more accessible to those who understand a child’s needs best—their parents,” U.S. Senate Finance Chairman Mike Crapo (R-ID) said. “Through this new provision and others, the Working Families Tax Cuts are helping ensure every Idaho student has the educational foundation necessary to succeed.”
The Department of the Treasury recently previewed forthcoming guidance to prepare states, taxpayers and other stakeholders for the launch of the Education Freedom Tax Credit in January 2027.
It is part of the Working Families Tax Cuts, which also:
Expanded 529 plan eligibility to include expenses for vocational schools and apprenticeship programs;
Doubled the amount families can withdraw annually from 529 plans to pay for K-12 education;
Made permanent a tax exclusion for employers that help repay their employees’ student loans;
“Every family deserves access to the education that’s right for their child, and every governor who has pledged to act once the rules were clear must now do exactly that. The time to opt in is now. AFC will continue to stand with parents seeking this life-changing opportunity,” American Federation for Children CEO Tommy Schultz said.