WATCH: Federal tax credit program gains bipartisan support

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(The Center Square) – Pennsylvania leaders and education advocates are urging the state to opt in to the new Federal Tax Credit Scholarship Program, which they say would expand school choice and increase funding for K-12 students.

The program, signed into law July 4, 2025, allows taxpayers to receive a 100% federal tax credit of up to $1,700 annually for donations to scholarship-granting organizations. Those organizations would then distribute funds to families for education-related expenses, including tuition, tutoring, special needs services and instructional materials.

Supporters argue the tax incentive would generate new contributions and help meet the demand that existing programs cannot satisfy.

Pennsylvania currently operates two similar programs, the Educational Improvement Tax Credit and Opportunity Scholarship Tax Credit, which provide hundreds of millions of dollars in scholarships annually. 

Yet those programs are limited and demand consistently exceeds available funding since the expansion of school choice initiatives.

States must choose to participate in the program, with a deadline of Jan. 1, 2027. So far, 27 governors have opted in, but Pennsylvania has not.

State Rep. Martina White, R-Pa., told The Center Square that the decision not to opt in could put taxpayers at a disadvantage.

“The more dollars we can put into these types of tax credit programs and into the hands of families to make the decisions themselves on what they think is best, the better off we're all going to be,” White said.

In Colorado, The Center Square reported that the tax credit program could generate between $164 million and $493 million annually, create thousands of jobs and expand access to schools of choice for tens of thousands of students.

Nationally, the proposal has drawn both bipartisan support and criticism.

Even in traditionally Democratic states like California and Connecticut, 77% and 84% of Democratic voters support opting in, according to Democrats for Education Reform. 

A study in Florida found that Florida’s Tax Credit Scholarship Program improved public school achievement over a 15-year period by introducing competitive pressure, and the program was 11 times more cost-effective at boosting student performance than increased spending alone.

Critics warn that funds could be distributed by private organizations without sufficient transparency or academic reporting requirements. Wisconsin Gov. Tony Evers vetoed a bill to join the Federal Tax Credit Scholarship, arguing it would divert public funds to private schools.

A majority of Wisconsin voters support the federal educational tax credit scholarship, with 55% in favor of opting in and 29% opposed, according to a Democrats for Education Reform poll.

Jorge Elorza, president and CEO of Democrats for Education Reform, said states that decline to opt in risk losing significant financial benefits.

“We need to do things differently,” Elorza said. “Pledging to put more money into more of the same and expecting the general public and parents to just trust that this time it's going to be different. How long do we expect families to believe that?”

Elorza added that despite political disagreements, the concept of school choice continues to resonate with voters. Though the initiative originated from President Donald Trump’s One Big Beautiful Bill, Elorza said it should be evaluated on its merits.

“The reality is with education, politics really matter, and so you have to make sure that good policy is also good politics,” Elorza said. “For the general public, choice and flexibility are popular – and it's popular because of course it is.” 

The Center Square reached out to the American Federation of Teachers Pennsylvania, for comment, but did not receive a response.