To amend the Internal Revenue Code of 1986 to allow a credit against tax for charitable donations to nonprofit organizations providing education scholarships to qualified elementary and secondary students.
Summary
What This Bill Does
The bill amends the Internal Revenue Code to create a new individual tax credit (Section 25F) and corporate tax credit (Section 45BB) for charitable contributions to scholarship granting organizations that provide K-12 education, establishes new Section 25F of the Internal Revenue Code creating a personal tax credit for qualified contributions to scholarship granting organizations, and creates new Section 45BB of the Internal Revenue Code establishing a general business tax credit for corporations making qualified contributions to scholarship granting organizations. It relies on tax credits, reporting requirements, exemptions, and compliance mandates. The main policy areas are Education.
Who Benefits and How
Private and religious K-12 schools could face fewer barriers, Lower-income families receiving K-12 education scholarships from SGOs could see lower costs, and Individual taxpayers making charitable contributions to SGOs could see lower costs.
Who Bears the Burden and How
U.S. Treasury (up to $10 billion+ in foregone annual tax revenue) could lose revenue opportunities, Scholarship granting organizations that fail to distribute receipts timely would take on compliance duties, and U.S. Treasury and federal tax revenue could lose revenue opportunities.
Key Provisions
- Amends the Internal Revenue Code to create a new individual tax credit (Section 25F) and corporate tax credit (Section 45BB) for charitable contributions to scholarship granting organizations that provide K-12 education...
- Establishes new Section 25F of the Internal Revenue Code creating a personal tax credit for qualified contributions to scholarship granting organizations.
- Creates new Section 45BB of the Internal Revenue Code establishing a general business tax credit for corporations making qualified contributions to scholarship granting organizations.
- Creates new Section 4969 of the Internal Revenue Code imposing a penalty on scholarship granting organizations that fail to distribute their receipts.
- Establishes a $10 billion annual volume cap on the total qualified contributions eligible for the tax credits under Sections 25F and 45BB.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
The bill amends the Internal Revenue Code to create a new individual tax credit (Section 25F) and corporate tax credit (Section 45BB) for charitable contributions to scholarship granting organizations that provide K-12 education, establishes new Section 25F of the Internal Revenue Code creating a personal tax credit for qualified contributions to scholarship granting organizations, and creates new Section 45BB of the Internal Revenue Code establishing a general business tax credit for corporations making qualified contributions to scholarship granting organizations.
Key Policy Areas
Education
Primary Purpose
The bill amends the Internal Revenue Code to create a new individual tax credit (Section 25F) and corporate tax credit (Section 45BB) for charitable contributions to scholarship granting organizations that provide K-12 education, establishes new Section 25F of the Internal Revenue Code creating a personal tax credit for qualified contributions to scholarship granting organizations, and creates new Section 45BB of the Internal Revenue Code establishing a general business tax credit for corporations making qualified contributions to scholarship granting organizations.
Policy Domains
Educational Choice for Children Act of 2025
Identified Gains
- Private and religious K-12 schools
- Lower-income families receiving K-12 education scholarships from SGOs
- Individual taxpayers making charitable contributions to SGOs
- High-income individual taxpayers who donate to scholarship granting organizations
- Corporations making charitable contributions to scholarship granting organizations
Identified Costs
- U.S. Treasury (up to $10 billion+ in foregone annual tax revenue)
- Scholarship granting organizations that fail to distribute receipts timely
- U.S. Treasury and federal tax revenue
- IRS/Department of the Treasury (must build real-time tracking system)
- U.S. Treasury (corporate tax revenue)
Sponsors
Legislative Progress
IntroducedMr. Smith of Nebraska (for himself, Mr. Owens, Mr. Walberg, …
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Private and religious K-12 schools, Private and religious K-12 schools (program scale guarantees significant scholarship volume), Private and religious elementary and secondary schools (including homeschools)
Positive-direction: Private and religious K-12 schools, Private and religious K-12 schools (program scale guarantees significant scholarship volume), Private and religious elementary and secondary schools (including homeschools), Scholarship granting organizations, Scholarship granting organizations (501(c)(3) nonprofits), Scholarship granting organizations meeting Section 25F requirements, Scholarship granting organizations receiving corporate donations
Negative-direction: Scholarship granting organizations (compliance obligations), Scholarship granting organizations that fail to distribute receipts timely
Eligible K-12 students (ensures funds are actually distributed as scholarships), Eligible students from households up to 300% area median income, Families of eligible students receiving SGO scholarships
IRS/Department of the Treasury (must build real-time tracking system), State and local education agencies (constrained from regulating participating schools), U.S. Treasury (additional foregone income tax revenue)
Donors to non-compliant scholarship granting organizations, High-income individual taxpayers who donate to scholarship granting organizations, Individual taxpayers making charitable contributions to SGOs
Positive-direction: High-income individual taxpayers who donate to scholarship granting organizations, Individual taxpayers making charitable contributions to SGOs, Taxpayers in smaller states (guaranteed 10% state allocation)
Negative-direction: Donors to non-compliant scholarship granting organizations
Corporations making charitable contributions to scholarship granting organizations, Corporations that donate to scholarship granting organizations
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "the_secretary"
- → Secretary of the Treasury (via IRS)
Key Definitions
Terms defined in this bill
An individual who is a member of a household with income not greater than 300% of area median gross income and is eligible to enroll in a public elementary or secondary school.
A charitable contribution (as defined in section 170(c)) to a scholarship granting organization in the form of cash or marketable securities.
Tuition, curricula, books, online materials, tutoring fees, testing fees, dual enrollment fees, and educational therapies for students with disabilities at public, private, or religious K-12 schools (including homeschool).
A 501(c)(3) non-private-foundation that substantially provides scholarships for K-12 education expenses, maintains separate accounts for qualified contributions, and meets operational requirements (or qualifies under existing state law).
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology