The federal tax credit would enable families with limited means to access private and religious schools or supplement instruction and resources for students in public schools

Carleen Johnson
The Center Square Washington

Two months after Congress passed the country’s first federal tax-credit scholarship program, it remains to be seen if Washington state Gov. Bob Ferguson will opt the state in, so families can take advantage of school choice scholarships.

The federal tax credit would enable families with limited means to access private and religious schools or supplement instruction and resources for students in public schools. However, to participate, states have to opt in by January 2027 and submit a list to the U.S. Treasury Department of the Scholarship Granting Organizations, or SGOs, in their states that meet the requirements of federal law.

Those requirements include being a 501(c)(3) organization, spending 90% or more of income from qualified contributions on scholarships, and providing scholarships to 10 or more students at more than one school.

“This is an incredible program,” Vicky Murray, director of the Center for Education at the free-market Washington Policy Center think tank. “This is a win-win for virtually all Washington school children and Washington taxpayers.”

Murray explained that tax credit scholarships for education are not a new idea.

“My home state of Arizona was the first state back in 1997 to enact a tax credit scholarship,” she said. “You get a dollar-for-dollar credit against either your state income or your corporate state income taxes.  So, state taxpayers get a break and school children get scholarships.”

The federal program allows taxpayers to take a credit on their federal income taxes of up to $1,700. The donation would go to designated organizations that distribute school choice scholarships.

“So, imagine getting seventeen hundred dollars off your federal tax bill,” Murray said. “And you’re giving to scholarship organizations that raise funds to cover all sorts of educational expenses for virtually every school child in the state of Washington.”

In a July 28 blog, Murray detailed qualifications and eligible expenses for the federal program.

“Eligible students must qualify to attend a public school, and their families’ incomes cannot exceed 300 percent of their areas’ median income,” she wrote, including a link to the median incomes of U.S. states.

“Scholarships can be used to cover the same elementary and secondary school expenses included in Coverdell education savings accounts, including:

• Tuition
• Fees
• Tutoring
• Special needs student services
• Books
• Supplies
• Uniforms
• Transportation
• Computers, and
• Supplementary services such as extended day programs”

“Essentially, what you’ll hear critics say is that it’s another voucher program. But here’s the critical difference between voucher scholarships and tax credit scholarships,” Murray noted. “A voucher scholarship is paid for with public funds or government appropriations. But tax credit scholarships are privately financed scholarships.”

Murray noted that Ferguson, in a recent opinion piece to The Seattle Times, suggested he has concerns about the program, which he called a voucher program.

Calling education “our paramount duty,” Ferguson wrote, “I’m deeply skeptical of voucher programs that could harm our public school system. I’ve directed my team to analyze whether we can use these funds in a way that benefits public school students.”

Murray disagrees.

“It’s not a voucher because it’s not using public funds,” she said. “This program will cost the state nothing. Children get educational expenses covered. Taxpayers get a break, and it costs the state nothing. So, it’s a win, win, win for everybody.”

The Center Square contacted Ferguson’s office for comment, but did not get a response.

This report was first published by The Center Square Washington.