The controversial program is estimated to provide $26 billion in taxpayer contributions annually for education expenses for public and private school students.
According to an October 1, 2026 proposed rule by the U.S. Treasury Department, states would have limited power to set specific conditions for how the first nationwide school choice program would operate in their localities. Families would be allowed to use taxpayer-supported scholarships for private school tuition and public school expenses such as tutoring, services for students with disabilities, books, computers and other costs, the proposed rule said.
The release of the proposed rule for the Education Freedom Tax Credit initiative marks a major development in the controversial program promoted by the Trump administration and approved through 2025’s One Big Beautiful Bill by the Republican majority in Congress.
Supporters have said the program will open up elementary and secondary school choice for families and generate billions of dollars in taxpayer contributions for educational expenses for public, private and homeschooled students. Critics, however, worry that public school funding will suffer, racial disparities will increase, and a lack of accountability and transparency could harm student outcomes.
The Treasury Department’s temporary regulation governing how states can participate in the voluntary program and approve scholarship-granting 501(c)(3) organizations to manage and disburse student scholarships was released to give states guidance before the program’s launch on Jan. 1, 2027.
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