Will Every State Elect Into New Scholarship Program
OBBBA provides up to a $1,700 tax credit starting in 2027. Will every state participate?
The One Big Beautiful Bill Act (OBBBA) provides for a non-refundable tax credit of up to $1,700 per individual starting in 2027 for contributing to a qualified scholarship organization that is certified by the state.
In order to be a qualifying organization, it must satisfy the following:
Provide scholarships to 10 or more students who do not all attend the same school.
Must spend at least 90% of its net income on scholarships.
Must provide scholarships for qualifying elementary or secondary education expenses.
Must provide scholarships to eligible students with a priority for:
Students awarded a scholarship in the previous year,
Any eligible student that had a sibling receive a scholarship in the previous year(s).
The organization cannot earmark or set aside contributions for scholarships on behalf of any particular student.
The organization must verify income and family size to meet the requirements under Code Section 25F.
And finally, it can’t provide a scholarship to a disqualified student (related party rules).
Each state can voluntarily elect to participate in the new program but is not required to.
This likely means that certain states that may not agree with providing additional tax credits outside of their educational system may elect not to participate.
We shall see and will keep you posted.