The Education Tax Credit in the Big Beautiful Bill: A Recipe for Disaster

Strategic Insights -

The education tax credit included in the Big Beautiful Bill has sparked concern among educators and policymakers, potentially threatening the survival of public education. The credit will allow parents to receive up to $1,700 in tax credits for contributions to nonprofit scholarship-granting organizations (SGOs), which can then distribute funds to private schools. This shift could lead to a mass exodus of parents from public schools, resulting in the loss of funding and a predominantly disadvantaged student population.

Key Takeaways:

  • The education tax credit in the Big Beautiful Bill will take effect in 2027 and could weaken public schools by accelerating a mass exodus of parents to private schools.
  • Parents with incomes up to $300,000 in some states could qualify for the tax credits, potentially draining public schools of precious funds.
  • The credits will further erode the separation of church and state, as religious groups may be able to form their own SGOs, and in states with voucher programs, the majority of funds have been used for religious schools.
  • The BBB credits will cost as much as $51 billion, exceeding the current federal aid for poor and disabled students.
  • Governors in blue states may have a partial escape route in regulating the tax credits, allowing them to prioritize educational enrichment over privatization.

Statistics:

  • Up to $1,700 in tax credits will be available for contributions to nonprofit SGOs.
  • Approximately $51 billion will be spent on BBB credits, surpassing current federal aid for poor and disabled students ($30 billion).
  • A majority of voucher program funds in states with voucher programs have been used for religious schools.

Sources:

  • (https://www.edchoice.org/2025-congress-enacts-first-ever-federal-tax-credit-for-education-scholarships/)
  • (https://www2.census.gov/library/publications/2024/demo/acsbr-023.pdf)
  • (https://www.washingtonpost.com/education/2025/03/07/school-voucher-programs-funding-new-federal-tax-credit/)
  • (https://hechingerreport.org/whats-a-tax-credit-scholarship-the-details-behind-the-first-national-school-voucher-program/)
  • (https://www.the74million.org/article/exclusive-poll-as-support-for-schools-plummets-americans-resist-closing-education-department/?utm_source=The%2074%20Million%20Newsletter&utm_campaign=1ad362dbb2-EMAIL_CAMPAIGN_2022_07_27_07_47_COPY_01&utm_medium=email&utm_term=0_077b986842-1ad362dbb2-176255609)
  • (https://www.nytimes.com/2025/07/03/us/federal-voucher-program-congress-private-school-tuition.html)
  • (https://foxbaltimore.com/news/local/governor-wes-moores-decision-on-federal-tax-credits-for-private-school-tuition-unclear)
  • (https://www.brookings.edu/articles/the-obbbas-tax-credit-scholarship-program-is-a-mess-that-might-be-worth-opting-into-anyway/?utm_campaign=Brown%20Center%20Newsletter&utm_medium=email&utm_content=375593303&utm_source=hs_ema)
  • (https://washingtonmonthly.com/2025/01/05/tutorize-dont-privatize-public-schools/)