Congress proposes refundable teacher tax credit and $5.2B in school grants tied to teacher pay

Eligible educators can start claiming the new refundable teacher tax credit

If you qualify, you could get at least $1,000 back at tax time, and possibly much more if you work in a high-poverty qualifying school or program.

Educators can claim the larger $500 educator expense deduction (and early childhood educators become eligible)

If you buy classroom supplies with your own money, you could deduct up to $500 instead of $250; early childhood educators could also use this deduction if they meet the hours rule.

Education Department begins collecting and sharing qualifying-school data with the Treasury

Schools and districts may be asked for poverty and program eligibility information so the IRS can verify who gets the bigger credit. This can affect how smooth or delayed claims/processing may be.

State/local agencies and early childhood program regulators must avoid cutting pay because of the credit

Teachers’ paychecks should be less likely to be reduced just because they’re receiving a federal tax credit, but agencies may face audits or have to show proof of compliance.

Teacher salary incentive grants become available under mandatory FY2026 funding

Some school districts that kept or raised their teacher salary schedules could apply for extra federal money for training, mentoring, credentials, and other teacher-support efforts.