Agudath Israel of America welcomes the release last week of the regulations for the Education Freedom Tax Credit (also known as the Federal Scholarship Tax Credit) by the Department of the Treasury. The announcement is great news for American families and provides the necessary clarity to allow states and scholarship organizations to implement the tax credit in time for its launch in January 2027.
The EFTC allows individual taxpayers to contribute to a nonprofit scholarship-granting organization (SGO) and receive a dollar-for-dollar tax credit of up to $1,700 per taxpayer. The SGO then pools the funds and distributes scholarships to eligible students for a wide range of K-12 educational expenses, including tuition to attend a Jewish or other nonpublic school. Eligible uses also include special education services, academic tutoring, and other expenses for public, private, charter, and homeschool students. Treasury estimates that 96 percent of children in participating states would be eligible to receive scholarship funds.
The 2027 rule satisfactorily answers many of the questions raised in comment letters and meetings by Agudath Israel and its coalition partners, but perhaps none more important than the definition of “each taxpayer.” The new regulation clarifies that a married couple filing jointly may each donate $1,700 and receive a combined $3,400 tax credit. This decision alone significantly increases the number of additional students receiving scholarships!
“Agudath Israel thanks the many senior officials and staff across the Trump administration who listened to the concerns of stakeholders and worked collaboratively with each other to produce regulations that will help millions of students across the country,” said Rabbi A. D. Motzen, Agudath Israel of America’s national director of government affairs. “We now urge the remaining 20 governors to opt in as soon as possible and for all states to move forward in approving scholarship-granting organizations that will provide educational opportunities for eligible students.”
To learn more about the Federal Scholarship Tax Credit, go to www.agudah.org/FSTC.
