Patrick Graff on the Education Freedom Tax Credit’s 52 Million Eligible Students, 121 Million Potential Donors, & 31 Participating States

Yes, so the Education Freedom Tax Credit was part of the One Big Beautiful Bill.

So this is a little known new piece of the federal tax code, just a couple pages long.

Honestly, that will completely revolutionize the way in which the federal government relates to education funding across the country.

and not because it's changing any existing education funding that happens through the Department of Education, but this is a new part of the tax code that is going to increase charitable giving to scholarship organizations.

These are nonprofit, we often call them scholarship granting organizations across the country who give scholarships to kids.

So these could be school choice scholarships for a student to go to the school that will best fit their needs, or it could be a scholarship for something like tutoring special education services or transportation for education.

And so what this new credit does is, uh, as opposed to your kind of standard federal deduction for a charitable donation that you can get to any donation to a nonprofit right now, or you get to, uh, right off that part of your income from your taxes this is a one-to-one credit so whatever you donate you get that back uh dollar for dollar up to seventeen hundred dollars so that is kind of the maximum credit per year that you can claim for these donations and there had been some early estimates of how much money maybe we could theoretically raise under the the tax credit The Education Freedom Tax Credit that was just passed.

And basically what I did in these series of reports is on the on the front end, we were trying to figure out, well, we have some eligibility rules under the law of who are the students who could benefit from this.

There's an income test.

There's some other qualifications around you being enrolled in a K-12 school.

So what is that population of students? And then on the back end, I realized after we did that report, I was like, well, what about the other ad? We need donors.

We need good, hardworking, taxpaying Americans to donate to their local scholarship organization and help create these scholarships for kids.

So, you know, you and I can both get $1,700 and a few of our friends, and that could fund a $5,000 or $6,000 scholarship for for a low income student to be able to finally attend the school of their choice somewhere around the country.

So how many of us are there? Right.

And that crosses the whole boundary of middle income to upper income folks who would be able to make a donation that have some tax liability.

So both of those questions kind of bookend, you know, this is the scale of the opportunity open to us through this new tax credit that starts in about three months.

A big part of this tax credit is making sure that students or their parents know that they can benefit from the scholarships awarded by those SGOs, scholarship granting organizations, and making sure that donors know that they can direct their federal tax liability up to $1,700 for donations to the scholarship granting organizations.

So I view these reports as very helpful data and we'll dig into it.

I also view them as an opportunity to continue to build awareness in the various populations that are going to be involved and impacted by the tax credit when it begins january 2027. let's start with the first report afc released that report back in july and i'll go ahead and say what you found nearly 52 million students or 91.7 percent of k-12 students nationwide will be eligible for the scholarships under the eftc that's a lot patrick

Yes, so the Education Freedom Tax Credit was part of the One Big Beautiful Bill.

So this is a little known new piece of the federal tax code, just a couple pages long.

Honestly, that will completely revolutionize the way in which the federal government relates to education funding across the country.

and not because it's changing any existing education funding that happens through the Department of Education, but this is a new part of the tax code that is going to increase charitable giving to scholarship organizations.

These are nonprofit, we often call them scholarship granting organizations across the country who give scholarships to kids.

So these could be school choice scholarships for a student to go to the school that will best fit their needs, or it could be a scholarship for something like tutoring special education services or transportation for education.

And so what this new credit does is, uh, as opposed to your kind of standard federal deduction for a charitable donation that you can get to any donation to a nonprofit right now, or you get to, uh, right off that part of your income from your taxes this is a one-to-one credit so whatever you donate you get that back uh dollar for dollar up to seventeen hundred dollars so that is kind of the maximum credit per year that you can claim for these donations and there had been some early estimates of how much money maybe we could theoretically raise under the the tax credit The Education Freedom Tax Credit that was just passed.

And basically what I did in these series of reports is on the on the front end, we were trying to figure out, well, we have some eligibility rules under the law of who are the students who could benefit from this.

There's an income test.

There's some other qualifications around you being enrolled in a K-12 school.

So what is that population of students? And then on the back end, I realized after we did that report, I was like, well, what about the other ad? We need donors.

We need good, hardworking, taxpaying Americans to donate to their local scholarship organization and help create these scholarships for kids.

So, you know, you and I can both get $1,700 and a few of our friends, and that could fund a $5,000 or $6,000 scholarship for for a low income student to be able to finally attend the school of their choice somewhere around the country.

So how many of us are there? Right.

And that crosses the whole boundary of middle income to upper income folks who would be able to make a donation that have some tax liability.

So both of those questions kind of bookend, you know, this is the scale of the opportunity open to us through this new tax credit that starts in about three months.

A big part of this tax credit is making sure that students or their parents know that they can benefit from the scholarships awarded by those SGOs, scholarship granting organizations, and making sure that donors know that they can direct their federal tax liability up to $1,700 for donations to the scholarship granting organizations.

So I view these reports as very helpful data and we'll dig into it.

I also view them as an opportunity to continue to build awareness in the various populations that are going to be involved and impacted by the tax credit when it begins january 2027. let's start with the first report afc released that report back in july and i'll go ahead and say what you found nearly 52 million students or 91.7 percent of k-12 students nationwide will be eligible for the scholarships under the eftc that's a lot patrick