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119-s-370119th CongressWALLET

Education Freedom Scholarships and Opportunity Act

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

Introduced

Summary

Creates federal tax credits to drive donations for student scholarships and workforce training. It would set up new individual and corporate credits, a national web portal for pre-approval and receipts, and a $10 billion annual cap split $5 billion/$5 billion for scholarships and workforce training.

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Bill Overview

Analyzed Economic Effects

5 provisions identified: 4 benefits, 0 costs, 1 mixed.

Individual tax credit for donors

If enacted, individuals would be able to claim a nonrefundable tax credit for cash donations to eligible scholarship or workforce training groups. The credit would be limited to 10% of your adjusted gross income and could not exceed your federal income tax owed. You would have to elect the credit for the tax year. Unused credit could be carried forward up to five years. The credit may be used for AMT purposes and rules will bar duplicate tax benefits.

Corporate tax credit for donations

If enacted, domestic corporations would be able to claim a business tax credit for cash donations to eligible scholarship or workforce training groups. The credit would be limited each year to the lesser of the donations or 5% of the corporation's taxable income. A corporation would need to elect the credit for a tax year. Corporate credits would be part of the general business credit framework and follow other program rules.

National cap and State allocations

If enacted, the program would cap eligible tax-credit contributions at $10 billion per year, split $5 billion for scholarships and $5 billion for workforce training. No State could get less than 0.5% of an allotment. The Education Secretary would reserve prior-year State contributions, use population and child-poverty shares (20%/80%) for scholarship allocations, and use a Labor Department system for workforce funds. The Secretary must announce State allocations by November 1, States must list eligible groups by January 1, and unclaimed or ineligible State amounts may be reallocated on or after April 1. An alternative allocation rule must be issued by the earlier of program year five or one year after scholarship credits hit $2.5 billion in a year.

Who can get scholarships and training

If enacted, eligible groups would be mostly 501(c)(3) nonprofits that meet State reporting and scale rules. Scholarship groups would need to give at least 90% of qualified donations to scholarships and serve multiple students, families, and providers. Workforce groups must not be private foundations and must provide vocational or apprenticeship training tied to portable credentials. Scholarships from these donations would not be taxable to students or parents, and States could not exclude providers because of religious character.

Online portal and program funding

If enacted, the Education Secretary would run an online portal listing eligible organizations and allowing donors to give and get immediate pre-approval and a receipt for tax filings. Donors could still give outside the portal only if they or the group get pre-approval from the Secretary. The bill would also authorize such sums as necessary, starting in fiscal year 2025, to run the portal and administer the program.

Sponsors & CoSponsors

Sponsor

Cruz, Ted [R-TX]

TX • R

Cosponsors

  • Sen. Lankford, James [R-OK]

    OK • R

    Sponsored 2/3/2025

Roll Call Votes

No roll call votes available for this bill.

View on Congress.gov
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