Trump's Big Beautiful Bill Adds Private School Tax Credit—Here's How It Works

Forbes

11 hours ago

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A provision in the One Big Beautiful Bill Act, recently signed into law by President Trump, will create the country's first federal tax credit for donations to private schools. It aims to give families more choice in their child's education, but critics warn it could divert much-needed funds from public schools and widen inequalities.
Benefits will come in the form of a tax credit, but the exact procedure is a little convoluted, considering the program was formed as a way to encourage donations to education non-profits.
Eligible American taxpayers who earn up to 300% of their area's median income can donate up to $1,700 to an eligible educational non-profit and receive a dollar-for-dollar tax credit. The donation would be awarded in the form of a scholarship by private schools to fund tuition, boarding, books, and other expenses for students.
States must opt in to the tax credit, so it may not be available everywhere.
Whether or not these types of programs are helpful is up for debate. Advocates for the program, such as the American Federation for Children , argue it will grant parents more freedom to pick a school that fits their child's needs and provide a higher quality education.
In an October 2023 statement—released years ahead of the bill's approval—the National Education Association explained that vouchers and voucher-based programs 'erode' public education by detracting already-limited resources from public schools open to all to private schools that 'can pick and choose their students.'
According to 2021 Census data, public school enrollment totaled 65.1 million students while private school enrollment clocked in at 14.4 million.
Education Week, a nonpartisan education news organization, estimates that the new tax credit scholarship program would disproportionately invest more money in private schools than public schools. It states the new program would invest five times more money than annual funding in the consolidated K-12 grant program for public schools, and at least 20 times more than the country puts towards the largest current school choice investment in charter schools.
The Urban Institute, a nonpartisan non-profit research organization, estimates the reconciliation bill would divert up to $5 billion in tax dollars to support up to 1 million students in private schools.
Experts like Randi Weingarten, president of the American Federation of Teachers, worry that the cost to taxpayers could balloon over $50 billion, seeing as the tax credit is uncapped.
'[That's] nearly double what the federal government spends on helping poor kids and kids with disabilities,' Weingarten said to The New York Times .
Whether private schools outperform public schools has long been debated. Landmark research, including the 1966 Coleman report, suggests that differences in school funding don't explain achievement gaps. Instead, these gaps come down to family socioeconomic background and the overall income diversity of a school. The Coleman analysis of more than 4,000 schools was reinforced by researchers at John Hopkins University.
Recent data continues to question the long-term advantages of private schools. One study published in the Educational Researcher journal found there are no academic benefits of attending private school in the long run.
Similarly, an analysis of research by Chalkbeat finds that after four years in a voucher program, children attending private schools in Louisiana saw a decline in standardized test scores in math, English, and science. Another subset of kids in D.C recovered in the third year after declining test scores, but the study noted that overall, 'vouchers had no clear effect on test scores.'
Currently, the Trump administration has frozen nearly $7 billion in funding for public schools, stating the funds were 'under review,' including support for teacher training, after-school and summer programs, English-learning programs, and more.