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119-s-1810119th CongressWALLET

Universal School Choice Act

Sponsored By: Senator Cruz, Ted [R-TX]

Introduced

Summary

Creates a new federal tax-credit system to fund K–12 scholarships by giving tax credits to individuals and corporations who donate to certified scholarship organizations. The bill pairs a $10 billion annual national cap with rules for scholarship groups, real-time reporting, and a new tax exclusion for scholarship payments.

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Bill Overview

Analyzed Economic Effects

5 provisions identified: 2 benefits, 0 costs, 3 mixed.

Corporate tax credit for donors

If enacted, corporations could claim a federal tax credit for qualifying donations to scholarship organizations, limited to 5% of the corporation's taxable income for the year. A corporation could not deduct any expense for which it claimed this credit. Corporate credits would also be limited by the national cap and state allocations.

Individual tax credit for donors

If enacted, you would be able to claim a federal tax credit for donations to scholarship organizations equal to your qualified contribution up to the greater of 10% of your AGI or $5,000. You would not be able to also take a charitable deduction for that same gift. If you do not use the whole credit, you could carry unused amounts forward for up to five years. Credits would be limited by the national dollar cap and state allotments.

National cap and state allotments

If enacted, the program would have a $10 billion national cap per calendar year starting in 2026 for credits tied to scholarship donations. The Treasury would reserve each State's prior-year designated contributions and split the rest 20% by each State's share of children 5–17 and 80% by each State's share of children 5–17 in poverty. No State would get less than 0.5%. If 90% of the cap is used in a year, the next year's cap would rise by 5% and the cap could not decline.

Tax-free scholarships for K-12 students

If enacted, amounts paid from scholarship organizations to a dependent for K‑12 education expenses would not count as that dependent's taxable income for amounts received after December 31, 2025. The scholarship must come from a qualifying scholarship organization and be used for allowed elementary or secondary expenses.

Rules and protections for SGOs

If enacted, scholarship organizations would have to be 501(c)(3) charities, keep SGO donations in separate accounts, and get independent annual audits. They would have to prioritize awards to last-year recipients, then their siblings, then students in families under 500% of the State poverty line. SGOs could not accept gifts earmarked for a named student. SGOs would also face a distribution rule: they must spend receipts (minus reasonable admin costs) by the first day of the third taxable year after receipt, with a 10% admin safe harbor, or risk donors losing credit eligibility for later gifts. The bill would bar governments from controlling SGOs or private schools and would let parents who used scholarships intervene in court to defend the law.

Sponsors & CoSponsors

Sponsor

Cruz, Ted [R-TX]

TX • R

Cosponsors

  • Sen. Cornyn, John [R-TX]

    TX • R

    Sponsored 5/22/2025

Roll Call Votes

No roll call votes available for this bill.

View on Congress.gov
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