Catholic schools could benefit from a federal scholarship tax credit starting in 2027

A new federal scholarship tax credit could allow taxpayers to direct up to $1,700 to an eligible scholarship-granting organization and claim the same amount as a credit against federal taxes owed, starting Jan. 1, 2027. Catholic education advocate Hosffman Ospino says the program could help fund scholarships for children and support Catholic schools.

The opportunity is not automatic for every taxpayer or school. Donations must go to eligible organizations in states that opt into the program, according to Ospino, a professor of theology and religious education at Boston College. More than 30 states had filed with the IRS or expressed interest in joining, he wrote. That figure combines states at different stages; the essay does not say how many had formally opted in.

Who can donate, and how?

Ospino describes a $1,700 donation as effectively offset by a dollar-for-dollar reduction in federal taxes owed. Married couples filing jointly could contribute up to $3,400 per household and receive the same benefit, he says. The program is a tax credit, not a tax deduction: the amount claimed reduces taxes owed rather than taxable income.

The donations would go to eligible scholarship-granting organizations, including some Catholic organizations. States that participate are expected to publish lists of eligible groups. Ospino says taxpayers in states that do not opt in may still contribute to Catholic scholarship organizations in participating states; the essay does not explain how that would work for tax-credit eligibility in each case.

What could the program mean for schools?

Ospino argues that the credit could bring new money to Catholic education without framing support for private schools as a loss for public education. He points to the Catholic school network’s history in the United States, including more than 13,000 Catholic elementary and secondary schools built over time. The essay does not estimate how much funding the program will generate or how many students may receive scholarships.

The scale of participation will depend in part on which states opt in and which eligible organizations receive donations. The essay says state lists are expected but does not name the organizations or provide a final list of participating states. Those details will determine where taxpayers can direct qualifying contributions as the program approaches its planned start.

This report draws on information from The Good Newsroom.