It would leverage the federal tax code to provide vouchers for students to attend private secular or religious schools, including in Democratic-led states where voters have rejected similar initiatives.  

The vouchers would be financed through charitable contributions from individuals to entities known as Scholarship Granting Organizations. In return, donors would receive a full federal tax credit equal to the amount of their contribution, creating a strong financial incentive to give. 

The SGO would allocate the donated funds as scholarships, which students could apply toward various educational expenses such as private school tuition, textbooks, and homeschooling materials. 

The program would cap total tax credits at $5 billion annually from 2026 through 2029 and would mark the first nationwide, federally funded tax credit initiative for private school education. It would also allow those who donate corporate stocks to avoid capital gains tax on those donations. 

“For years, I’ve advocated for school choice with my Educational Choice for Children Act. I am pleased to see it included in the big, beautiful bill,” Cassidy said in a statement. “Expanding President Trump’s tax cuts is about preserving the American Dream. Giving parents the ability to choose the best education for their child makes the dream possible.”

Supporters of private and charter schools praise the move but urge Congress to go further by pairing it with a charter school expansion tax credit as part of the broader package.

“It was a tremendous victory to see the tax credit envisioned by the ECCA included, but it was incomprehensible to me that the bill would not seek to use this perhaps once-in-a-generation opportunity to expand the charter school movement across the country,” said Rep. Kevin Kiley (R-CA) in a statement sent to the Washington Examiner. 

Kiley introduced the High-Quality Charter Schools Act in April. This act would provide a tax credit for charitable donations that would develop and expand the number of charter schools, giving even more students access to school choice options. 

Last week, Sen. Tim Scott (R-SC) introduced the Senate version of legislation to address the high demand for charter schools.

“President Trump is delivering on his commitment to putting families first—this is promises made, promises kept. Together with the Educational Choice for Children Act, this legislation brings parents, educators, and communities together in the fight to ensure every child has a fair shot at success,” Scott said in a statement. 

Opponents of a federal tax break for private school choice warned during a Thursday webinar hosted by AASA, the School Superintendents Association, that the plan could widen gaps in access to quality education and drain resources from already struggling public schools. 

Denise Forte, president and CEO of EdTrust, a nonprofit organization, called the proposal “nothing short of theft.”

“It’s taking dollars away from programs that would strengthen all schools, expand access to early childhood, make sure that our kids have access to mental health counselors, to other mental health supports — resources our students need that you are not going to get from the private marketplace,” Forte said during the webinar. 

Amy Hanauer, executive director of the Institute on Taxation and Economic Policy, noted that no other federal charitable program offers a tax incentive as generous as the one proposed in this plan. The institute estimates that the bill could reduce federal tax revenue by $23.2 billion over the next decade.

Hanauer explained the bill sets up a special tax loophole for the wealthy, letting them dodge capital gains taxes when they donate stocks to private schools. 

“The result would be a profitable tax shelter for wealthy people who agree to help funnel public funds into private schools, that is to say, they would get more money by donating their stock than by selling it,” Hanauer said.

Data from the 2022 Census show that about 12% of K-12 students in the United States go to private schools, while the vast majority, 84%, are enrolled in public or charter schools.

The legislation now moves to the Senate, where the school choice measures could pass through the budget reconciliation process. Only 51 votes are needed in the chamber because Republicans hold 53 seats.

CHARTER SCHOOL LEADER PUSHES FOR $5 BILLION TAX BREAK IN TRUMP MEGABILL: ‘FIX THIS OVERSIGHT’

Eva Moskowitz, CEO of New York City’s largest charter network, has urged Congress to seize this “once-in-a-generation” chance to pass sweeping school choice reform.

“Congress has a once-in-a-generation opportunity to put families first and deliver on the President’s promise of universal school choice,” she said in a statement. “It’s hard to imagine a more meaningful policy than one that places parents, not bureaucrats, in charge; empowers American taxpayers, and unlocks private philanthropy to provide high-quality schools for every kid that needs it.”