Treasury Regulations for the Federal Scholarship Tax Credit Fail To Protect Students

Photo credit: Taylor Flowe via Unsplash. Article by Paige Shoemaker DeMio. Center for American Progress – October 5, 2026.

The One Big Beautiful Bill Act (OBBBA), signed into law by President Donald Trump in July 2025, made drastic cuts to assistance programs and cut taxes for the rich. The OBBBA also created a less-known program—the Federal Scholarship Tax Credit (FSTC), a federal voucher program that will harm public school students and benefit the wealthy. Beginning in 2027, the FSTC will allow individuals to claim a dollar-for-dollar federal tax credit, up to $1,700, for their donations to scholarship-granting organizations (SGOs), which keep up to 10 percent of the donation and distribute 90 percent through educational “scholarships”—also commonly known as vouchers—to K-12 students. […]

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