Bishop David M. O’Connell praises Federal Scholarship Tax Credit

Bishop David M. O’Connell, chairman of the United States Conference of Catholic Bishops’ Committee on Catholic Education, called the proposed regulations for the Federal Scholarship Tax Credit a transformative opportunity for children. The U.S. Department of the Treasury and the IRS announced the proposed rules on Oct. 1 to implement the program, which was enacted in 2025 and is scheduled to launch Jan. 1.

The tax credit, also known as the Education Freedom Tax Credit, provides a nonrefundable federal credit for contributions made to scholarship-granting organizations. These funds benefit students in public, charter, or private schools, including religious institutions. For the program to be available to children in a specific state, that state must formally elect to opt in. Federal agencies stated that approximately 96% of children in participating states would be eligible for the funds.

Steven F. Cheeseman, president and CEO of the National Catholic Educational Association, noted that the announcement clarifies that married couples filing jointly can claim up to $3,400 for eligible contributions, doubling the previously understood $1,700 household limit. Individuals may claim up to $1,700 for qualifying contributions. The National Catholic Educational Association stated the regulations provide necessary clarity for donors, states, and scholarship-granting organizations.