Credit for Contributions to Qualified Scholarship Organizations – One Big Beautiful Bill

On July 4, 2025, President Trump signed the One Big Beautiful Bill into law. The legislation makes far-reaching changes to the federal tax code and other parts of the government. The bill cuts certain taxes, changes funding for a number of federal programs, raises the debt ceiling by $5 trillion, and extends many of the provisions originally introduced in the 2017 Tax Cuts and Jobs Act (TCJA).

Credit for Contributions to Qualified Scholarship Organizations

Beginning in 2027, the bill provides a new tax credit for contributions to a qualified scholarship organization. The credit is for 100% of the first $1,700 of contributions. The credit is reduced by any state tax credit allowed for the qualified contribution. Recipients of the scholarships do not need to include them in taxable income.

There are several requirements that the scholarship organization must meet in order for the contributions to be eligible for the credit.

• The state must create a list of eligible organizations that provide scholarships in that state and include the organization on the list.
• The organization must use the contribution to fund scholarships for eligible students only in the state that included it on the list.
• The organization can be qualified in only one state.
• Students receiving the scholarship must be a member of a household with annual income no greater than 300% of the area median gross income.
• The organization must provide scholarships to at least 10 students and those students may not all attend the same school.

For individuals who want to support scholarship programs for private schools, this credit is very attractive. They can contribute up to $1,700 to a scholarship organization and offset all the contribution with a credit against their taxes.

Contact Us

With major changes to tax rules, both individuals and business owners are encouraged to revisit tax strategies. A proactive approach will be essential to capture benefits, manage risk, and stay compliant as the new provisions take effect. If you have questions about the information outlined above, or need assistance with another tax issue, WhippleWood CPAs can help. For additional information call 303-989-7600 or click here to contact us. We look forward to speaking with you soon.