While little noted, “school choice” advocates won a major victory with provisions contained in President Trump’s tax megabill, the “One Big Beautiful Bill Act.”
The act includes a new way for taxpayers – whether they are parents or not – to direct tax dollars to private school scholarships instead of the Treasury.
It creates a school choice program that provides a generous dollar-for-dollar tax credit for individual taxpayers who donate up to $1,700 annually to nonprofit “scholarship granting organizations,” SGOs.
The law allows taxpayers to redirect a portion of their federal tax bill to SGOs. The taxpayer would write a check to an SGO but get that same amount back via a reduction in their income taxes, instead of a regular tax deduction for the donation.
It’s a donation that doesn’t ultimately cost the donor anything.
The SGO would issue scholarships – sometimes called vouchers – to eligible families. These stipends could go for a variety of educational purposes at public, private or religious schools.
Families are eligible to receive scholarships with an income cap of three times the median in the area. Most households with children would qualify.
Taxpayers can’t earmark funds for specific children, including their own. Otherwise, SGOs would have wide authority to determine which students and schools receive stipends.
The measure goes into effect in 2027, with no expiration date. It’s unclear how much the program will cost or how many scholarships it will fund. That will depend on how many taxpayers channel their tax dollars to SGOs and how many states participate.
A huge marketing campaign will be needed to inform taxpayers of this option.
However, state governors must opt into the program. Democratic-led states may reject it, derailing school-choice advocates’ goal for nationwide application.
It may set up fights in states, like Nevada, with divided governments.
Politically it could advantage Republicans, because the issue sharply divides Democratic voters.
Teachers unions and white progressives overwhelmingly oppose any public support for private schools. But school choice is popular within the black and Hispanic communities, especially among parents.
It’s a dilemma for Democrats.
“There is no Democratic vision on education and that needs to be rebuilt,” says Jorge Elorza, former mayor of Providence, R.I., and head of Democrats for Education Reform, a group that backs charter schools and school vouchers.
Will Democratic governors opt their states into the new federal school choice program, allowing families to accept scholarships that are funded by charitable donations from taxpayers nationwide? These scholarships don’t cost their states anything and therefore can’t be said to take money away from their public schools.
Or will they bow to the demands of the teachers unions creating an opportunity for GOP candidates running against them?
It will be interesting to watch Democratic governors – potential Democratic presidential candidates – grapple with this conundrum.
Pennsylvania’s Gov. Josh Shapiro has indicated limited support for school choice. Colorado’s Jared Polis founded a public charter school. Kentucky’s Andy Beshear, Michigan’s Gretchen Whitmer, California’s Gavin Newson, Illinois’ JB Pritzker and Minnesota’s Tim Walz have been opponents. Maryland’s Wes Moore’s position is unclear.
The first rule of partisan politics is to promote issues that unify your supporters while dividing the other party’s. School choice unifies Republicans and divides Democrats.
It’s analogous to Obamacare’s expansion of Medicaid, which some Republican-led states rejected.
Over the past 15 years, 40 states opted for Medicaid expansion, including 20 that Trump won in 2024. Lots of Republican governors, including Nevada’s Brian Sandoval, proved unwilling to turn down an offer that had the federal government initially paying 90% of the costs.
This is the blue-state equivalent.
In Nevada, the state’s small Opportunity Scholarships program, opposed by Democrats, allows corporations to specifically direct their Modified Business Tax liability to one of six approved SGOs. That currently provides 1,800 eligible lower-income students with K-12 private school scholarships up to $10,094.
