Federal Tax Credit Program Offers Significant Scholarship Funding for K-12 Education
Beginning in 2027, a new federal tax credit program will allow individuals to claim a tax credit of up to $1,700 for contributions made to qualifying scholarship-granting organizations. These organizations will then use the funds to provide scholarships for eligible K-12 students, including those attending Jewish day schools. Unlike a charitable deduction, which reduces taxable income, this credit directly reduces a donor's tax bill dollar-for-dollar. While the credit is nonrefundable and cannot be combined with a charitable deduction for the same contribution, any unused amount can generally be carried forward. The program is projected to generate substantial scholarship funds, with one estimate suggesting $18.8 billion if 10% of eligible donors participate. However, states must choose to participate and submit lists of qualified scholarship organizations for their residents to benefit. As of a September 14 update from the IRS, states with significant Jewish communities and day schools, such as New York, ...
