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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.
2/26/2025, 7:48 PM
Summary of Bill HR 817
Under this proposed legislation, individuals and businesses who donate to these nonprofit organizations would be eligible to receive a credit against their taxes. This credit would serve as an incentive for individuals and businesses to contribute to these organizations, ultimately helping to support students in need of financial assistance for their education.
The bill specifically targets nonprofit organizations that provide scholarships to elementary and secondary students, emphasizing the importance of education at a young age. By offering tax credits for donations to these organizations, the government hopes to encourage more individuals and businesses to support education initiatives and help students access quality education opportunities. Overall, Bill 119 HR 817 seeks to promote education and provide financial assistance to students in need through the use of tax credits for charitable donations. If passed, this legislation could have a positive impact on education funding and accessibility for elementary and secondary students across the country.
Congressional Summary of HR 817
Educational Choice for Children Act of 2025
This bill establishes a nonrefundable tax credit for contributions (cash or stock) made by an individual to a tax-exempt organization that provides scholarships for qualified elementary and secondary school expenses to eligible students (scholarship granting organization), subject to limitations.
Under the bill, the tax credit is limited to the greater of $5,000 or 10% of adjusted gross income.
Further, the bill establishes a $5 billion annual volume cap (for 2025-2028) for the tax credit (which may be increased under certain circumstances). The volume cap is allocated by the Department of the Treasury for the tax credit on a first-come, first-serve basis (based on the contribution date). However, under the bill, 10% of the volume cap must be divided evenly among states for allocation to individuals residing in those states.
The bill allows any portion of the tax credit that exceeds the individual’s tax liability (less certain other tax credits) to be carried forward for up to five tax years.
The bill also
- establishes specific requirements for a scholarship granting organization,
- requires a scholarship granting organization to distribute all contributions within a specific timeframe (exceptions apply), and
- excludes from gross income scholarships received by an individual from a scholarship granting organization.
Finally, the bill prohibits federal, state, and local government entities, officers, and employees from imposing requirements that prevent the use of scholarship funds for private or religious elementary or secondary education expenses or discouraging the use of scholarship funds at such education institutions.
