States must ‘opt in’ for families to benefit from federal school choice credit

A sweeping new federal tax credit could reshape American education by funding private-school scholarships across the country — but the change depends entirely on whether state governors decide to opt in.

In a July 21 article for Wall Street Journal, education reporter Matt Barnum explained that while the law has already been enacted as part of President Donald Trump’s tax overhaul, it now falls to individual governors to decide if their states will accept the new funding mechanism. 

At stake is a dollar-for-dollar federal tax credit for donations to nonprofit scholarship-granting organizations (SGOs), which would then distribute private-school tuition assistance to qualifying families.

“The legislation says that generally governors will decide whether SGOs in their state are eligible to receive federally subsidized donations,” Barnum wrote. 

According to Barnum, most Republican governors are expected to opt in without hesitation.

“For Democratic governors, the calculation will likely be more complicated,” Barnum wrote. “They will face pressure from school associations, including teachers unions, to opt out of the new federal tax credit.”

Vladimir Kogan, a political science professor at Ohio State University, compared the situation to past GOP resistance to Medicaid expansion under the Affordable Care Act. 

“This is going to be the blue-state equivalent,” he said.

That opt-in clause is already drawing political battle lines in Democrat-led states.

David Goldberg, president of the California Teachers Association, told Barnum that the program is “a distraction from what really needs to happen,” accusing its backers of using it “to cloak their vicious, savage cuts to public education.” 

Some Democrats who favor school choice are urging their party to approach the law pragmatically. Jorge Elorza, who leads Democrats for Education Reform, expressed optimism that state leaders might still participate. 

“We believe that choice is the future and it’s really important for Democrats to get on board,” he told Barnum.

The law takes effect in 2027 and, as Barnum reported, has no built-in expiration. Its budget impact is projected at $25.9 billion over ten years, though actual uptake will depend on how many private donors choose to participate and how many states approve SGOs to operate.

>> School choice movement sees surge with dozens of states now on board <<

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