- An August 2026 analysis says 51.7 million children could qualify for scholarships under the federal Education Freedom Tax Credit.
- The credit offers up to $1,700 for donations to approved Scholarship Granting Organizations starting January 1, 2027.
- About 20.8 million eligible students live in states that have not opted in, limiting access.
An August 2026 analysis estimates that 51.7 million children could qualify for scholarships under the federal Education Freedom Tax Credit, not 121.5 million taxpayers as stated in the headline. The donor credit, worth up to $1,700, begins for contributions made on or after January 1, 2027.
The estimate comes from the American Federation for Children, whose lead researcher Patrick Graff examined eligibility under the new federal program. The analysis counts potential student beneficiaries, while the credit itself applies to taxpayers who donate to approved scholarship organizations.
Congress created the program through the One Big Beautiful Bill Act, adding Section 25F to the Internal Revenue Code. It offers a nonrefundable federal income tax credit for qualified contributions to eligible Scholarship Granting Organizations.
The number is broad. Households can qualify when their income is at or below 300 percent of area median gross income, and the student must generally be eligible to enroll in a public elementary or secondary school.
The analysis says 51.7 million children qualify out of roughly 56.4 million children enrolled in, or eligible to enroll in, K-12 education. That represents 91.7% of the group measured.
State participation will determine where families can access the program. About 20.8 million eligible students live in states that have not opted in, according to the analysis.
White House Press Secretary Karoline Leavitt presented the policy as a national expansion of school choice. She said:
“Through the Education Freedom Tax Credit, President Trump has delivered the largest national expansion of education freedom in history for over 50 million eligible children,”
Leavitt also said states have “raced to this historic school choice option.” The White House has described the initiative as “the largest national expansion of education freedom in American history.”
State participation will determine how many students can use the program
A separate state breakdown counts 31 states that have opted in or signaled an intention to participate. Those states cover 30.9 million eligible students.
The totals vary depending on whether announced plans count as formal participation. Other descriptions put the number at 30 or 31 states.
A state must opt in before residents can use the credit through scholarship organizations operating there. The program therefore has a national tax provision but a state-dependent delivery system.
Secretary of Education Linda McMahon promoted the credit at a Trump back-to-school event, highlighting its $1,700 limit and 2027 start. The scholarships can help pay for several K-12 expenses.
| Program feature | Current detail |
|---|---|
| Eligible household income | At or below 300% of area median gross income |
| Maximum annual credit | $1,700 per individual taxpayer |
| Start date | Contributions made on or after January 1, 2027 |
| Students in participating or intending states | 30.9 million |
| Students in states not yet participating | 20.8 million |
| Potentially eligible children nationwide | 51.7 million |
The credit applies to donations rather than directly reimbursing a family’s school costs. Eligible scholarship expenses can include tuition, tutoring, transportation, technology, books, supplies and other K-12 costs.
The tax benefit is limited in several ways. A taxpayer cannot claim both the federal credit and a charitable deduction for the same contribution. Any state tax credit claimed for that contribution also reduces the federal credit.
Unused credits may carry forward for up to five years. The annual limit remains $1,700 per individual taxpayer.
Sen. Cindy Hyde-Smith has introduced the Federal Tax Credit Scholarship Improvement Act (S.5322), which would adjust the program. Her Senate description also lists a credit of up to $1,700 a year for donations to qualified scholarship organizations.
States are still deciding whether to participate before the operational launch. The program remains scheduled to begin on January 1, 2027, when qualifying contributions can first receive the federal treatment.
