Keep Public Funds in Public Schools Act

Key Points

• This bill would eliminate the federal tax credit (Section 25F) that people can claim when they donate to scholarship granting organizations, which fund private school scholarships. Starting in tax years after 2026, donors would no longer be able to reduce their tax bill through these contributions.
• The bill also repeals the exclusion from gross income (Section 139K) for scholarship-related payments. Starting in 2027, recipients of these scholarships would have to count that money as taxable income.
• The changes would take effect for taxable years ending after December 31, 2026, meaning donors and scholarship recipients would feel the impact starting with their 2027 tax filings.
• The bill has broad Democratic support with 29 Senate cosponsors, including Senate leaders like Schumer and committee leaders like Wyden, but faces steep odds in a Republican-controlled Congress that created these tax credits.

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