After decades in the world of accounting and finance, including my time leading PricewaterhouseCoopers, I know all too well the complications of the U.S. tax code. But I’ve also seen firsthand how well-designed tax policy can drive investment, expand opportunity, and strengthen communities. The most effective policies align individual incentives with broader societal goals.
The 2025 budget reconciliation bill included several such provisions. Among these is the first-ever individual tax credit scholarship program, an approach that will broaden philanthropic giving and expand K-12 educational opportunities for millions of children for years to come.
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Beginning in 2027, taxpayers can use our tax system directly to enable access to educational opportunities, supporting K-12 students in their communities and better serving the public good. A moment of disconnection from how your government uses your tax dollars immediately becomes an empowered support for good policy.
This historic new law will allow any taxpayer who owes federal individual income tax to receive a 100% tax credit, up to $1,700 annually, for contributions to a qualified scholarship-granting organization. These SGOs award scholarships to K-12 students in all types of schools — public, private, religious, and other — for a range of educational expenses.
Such a dollar-for-dollar credit is unprecedented, as it is the only 100% individual credit in the Internal Revenue Code. This new charitable opportunity empowers parents to choose what works best for their children and increases accountability and competition in K-12 education. We can all agree that improving the U.S. education system is a national imperative, and this new tax policy will bring enormous good to our nation.
A tax credit is fundamentally different from a tax deduction, and that distinction matters. A deduction reduces an individual’s taxable income, with only a portion resulting in a reduction of tax liability. By contrast, a credit is a reduction of the actual tax liability owed to Uncle Sam. What makes this new law so powerful is that a taxpayer can make a charitable donation to help provide parents with more options and students with more resources at no cost to the individual taxpayer.
Simply put, if a family owes $10,000 in federal income taxes and contributes $1,700 to a qualified SGO, their tax liability drops to $8,300. That’s real money that flows directly to students who need it.
Scholarships generated through this program are funded only with private donations, not government money that may come with strings attached. Scholarships can be used for a wide range of educational needs, including tuition and fees, tutoring, special education services, materials, after-school programs, and more. For students in under-resourced public school districts, this opens doors. A student whose family has been saving for years to access better educational options suddenly has real alternatives. A family that needs supplemental tutoring services for their child can now afford them. A student who needs updated technology or school supplies can access them.
But this new law is not about private schools versus public schools, since both can benefit from the scholarships. It is instead about access and opportunity. Nearly all families across the spectrum benefit. Education is not one-size-fits-all, and policy shouldn’t be either.
Governors now hold the key for families as they must decide whether to opt their state into the program. So far this year, 29 states have opted in, moving quickly to unlock these opportunities for K-12 students starting in 2027.
The stakes are real. If a governor declines to opt in, students in that state will be left without access to the scholarships. Taxpayers in nonparticipating states can still donate $1,700 and get the tax credit, but their donations will be sent outside their communities and across state lines to support students in participating states.
That’s not just a missed opportunity. It’s a competitive disadvantage.
I firmly believe that few investments are more important than education. Education is the foundation of opportunity. That’s why the new federal tax credit scholarship program deserves serious attention from tax professionals and taxpayers.
OPINION: GOVERNORS SHOULD OPT INTO TRUMP SCHOOL CHOICE TAX CREDIT TO COMPLEMENT STATE PROGRAMS
This is not hypothetical. States, such as Florida and Arizona, that have implemented similar education choice programs, including tax credit incentives, have seen remarkable results. Families have gained access to educational options that were previously out of reach, and students have thrived in environments better suited to their needs. This new tax credit supplements these very successful programs, increasing their impact.
When we remove barriers to opportunity and empower parents to make decisions about their own children’s education, everyone wins. Now, we have a chance to expand that success nationally.
Samuel A. Di Piazza Jr. currently serves as the board chairman at Warner Bros. Discovery and previously served as global CEO of PricewaterhouseCoopers. He serves on the boards of Seton Education Partners and the Inner-City Scholarship Fund and is a strategic adviser to the Invest in Education Foundation.
