Federal RuleAug 21
62
DOL Rewrites Disability Rules for 'Merit-Based Opportunity' Push
RuleLabor DepartmentFederal Contract Compliance Programs OfficeSignificant Wallet
119-hr-817119th CongressWALLET
To amend the Internal Revenue Code of 1986 to allow a credit against tax for charitable donations to nonprofit organizations providing education scholarships to qualified elementary and secondary students.
Sponsored By: Representative Smith, Adrian [R-NE-3]
Introduced
Summary
A nonrefundable federal tax credit for donations to Scholarship Granting Organizations would let individuals get tax relief for funding K–12 scholarships and related education costs. The bill sets who qualifies, how scholarships must be run, and limits total annual credits to $5.0 billion through 2028 with 10% reserved for states.
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- Families and students: Households with income up to 300% of area median gross income could receive scholarships that pay for tuition, curriculum and materials, books, approved tutoring, standardized and AP tests, dual enrollment, therapies for disabilities, and homeschool expenses.
- Donors and taxpayers: Individuals would receive a nonrefundable personal income tax credit equal to their qualified contributions up to the greater of 10% of adjusted gross income or $5,000. Credits are subject to a $5.0 billion annual volume cap and unused credits can carry forward for up to 5 years.
- Scholarship Granting Organizations: SGOs must award scholarships to at least two students at different schools, verify household income with specified documents, obtain annual independent audits, avoid self-dealing, and meet a 100% distribution requirement less reasonable administrative costs with a 10% safe harbor and 15% carryover.
- Schools and parental rights: The bill bars government control over participating SGOs and private or religious schools and protects parents’ rights to intervene in legal challenges involving scholarships.
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Bill Overview
Analyzed Economic Effects
3 provisions identified: 2 benefits, 0 costs, 1 mixed.
Exclude SGO scholarships from income
If enacted, scholarship payments from an SGO to your dependent for qualified K–12 expenses would not be included in your household's gross income. This applies to amounts received after Dec 31, 2024. The same definitions for eligible students, qualified expenses, and SGOs used for the tax credit would apply.
Federal tax credit for school donations
If enacted, you would be able to claim a federal nonrefundable tax credit for cash or marketable security donations to scholarship organizations. The credit equals your qualified donations but cannot exceed the greater of 10% of your AGI or $5,000, and is also limited by a federal volume cap allocation to you. There is a $5 billion national cap for each calendar year 2025–2028 (10% of each year split evenly across States). The credit is reduced by any State tax credit for the same donation. Unused credit may be carried forward up to five years on a first-in, first-out basis.
New rules and limits for scholarship groups
If enacted, scholarship granting organizations (SGOs) would have new eligibility, governance, and distribution rules. SGOs must be public charities (not private foundations), keep donations in separate accounts, give scholarships to at least two students (not all at one school), and verify household income with specified documents. They must get annual independent CPA audits and may not allow earmarking to named students. Administrative expenses are deemed reasonable at 10% or less, up to 15% of receipts may be carried to the next year, and distributions must be made by the first day of the third taxable year after receipt. The Secretary may disqualify noncompliant SGOs, and parents of eligible students would have the right to intervene in court challenges supporting the law.
Sponsors & CoSponsors
Sponsor
Smith, Adrian [R-NE-3]
NE • R
Cosponsors
Rep. Owens, Burgess [R-UT-4]
UT • R
Sponsored 1/28/2025
Rep. Walberg, Tim [R-MI-5]
MI • R
Sponsored 1/28/2025
Rep. Kelly, Mike [R-PA-16]
PA • R
Sponsored 1/28/2025
Rep. Yakym, Rudy [R-IN-2]
IN • R
Sponsored 1/28/2025
Rep. LaHood, Darin [R-IL-16]
IL • R
Sponsored 1/28/2025
Rep. Letlow, Julia [R-LA-5]
LA • R
Sponsored 1/28/2025
Rep. Miller-Meeks, Mariannette [R-IA-1]
IA • R
Sponsored 1/28/2025
Rep. Donalds, Byron [R-FL-19]
FL • R
Sponsored 1/28/2025
Rep. Tenney, Claudia [R-NY-24]
NY • R
Sponsored 1/28/2025
Rep. Feenstra, Randy [R-IA-4]
IA • R
Sponsored 1/28/2025
Rep. Moore, Blake D. [R-UT-1]
UT • R
Sponsored 1/28/2025
Rep. Hern, Kevin [R-OK-1]
OK • R
Sponsored 1/28/2025
Rep. Malliotakis, Nicole [R-NY-11]
NY • R
Sponsored 1/28/2025
Rep. Lawler, Michael [R-NY-17]
NY • R
Sponsored 1/28/2025
Rep. Fong, Vince [R-CA-20]
CA • R
Sponsored 1/28/2025
Rep. Carey, Mike [R-OH-15]
OH • R
Sponsored 1/28/2025
Rep. Hudson, Richard [R-NC-9]
NC • R
Sponsored 1/28/2025
Rep. Salazar, Maria Elvira [R-FL-27]
FL • R
Sponsored 1/28/2025
Rep. Franklin, Scott [R-FL-18]
FL • R
Sponsored 1/28/2025
Rep. Crenshaw, Dan [R-TX-2]
TX • R
Sponsored 1/28/2025
Rep. Wilson, Joe [R-SC-2]
SC • R
Sponsored 1/28/2025
Rep. Rose, John W. [R-TN-6]
TN • R
Sponsored 1/28/2025
Rep. Weber, Randy K. Sr. [R-TX-14]
TX • R
Sponsored 1/28/2025
Rep. Ciscomani, Juan [R-AZ-6]
AZ • R
Sponsored 1/28/2025
Rep. Moolenaar, John R. [R-MI-2]
MI • R
Sponsored 1/28/2025
Rep. Allen, Rick W. [R-GA-12]
GA • R
Sponsored 1/28/2025
Rep. Dunn, Neal P. [R-FL-2]
FL • R
Sponsored 1/28/2025
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov