Pennsylvania has not yet opted into a new federal education tax credit program that is scheduled to become available Jan. 1, 2027.
The Federal Scholarship Tax Credit program, also known as the Education Freedom Tax Credit, was created by Congress in 2025 through the Working Families Tax Cuts Act as part of the One Big Beautiful Bill.
The program establishes a federal tax credit of up to $1,700 for individuals who contribute to eligible Scholarship Granting Organizations. Those nonprofit organizations use qualified donations to provide scholarships for education-related services at public or private schools.
Thirty-one states have either opted into the program or announced plans to participate. Pennsylvania Gov. Josh Shapiro has not yet committed the state to participation.
A spokesperson for the Shapiro administration said the governor is waiting for additional federal guidance on issues including student eligibility and how the program will interact with existing programs.
The U.S. Department of the Treasury and Internal Revenue Service expect to issue proposed regulations by the end of September. Participating states will be required to submit lists of qualifying Scholarship Granting Organizations before the program begins Jan. 1.
If Pennsylvania does not participate, residents could still claim the federal tax credit by contributing to an eligible organization in a participating state. Those contributions would fund scholarships in that state rather than Pennsylvania.
A bipartisan group of Pennsylvania lawmakers has proposed legislation that would require the state to participate in the program.
Sen. Anthony Williams, D-Philadelphia, has joined five Republican senators in supporting the effort. Williams said the program could provide additional educational support to families without taking money from public education or increasing taxes.
The Commonwealth Foundation, which supports greater school choice, has also called for Pennsylvania to participate.
Rachel Langan, a senior policy analyst with the organization, estimated that about 1.8 million Pennsylvania public and private school students could be eligible for scholarships. She said eligible expenses could include tutoring, textbooks, special needs assistance, after-school programs and summer programs.
Groups including AFT Pennsylvania have historically opposed tuition tax credits and voucher programs, arguing that they divert resources and attention from traditional public schools. AFT Pennsylvania did not provide a comment before publication.
Of the 31 states that have opted in or announced plans to participate, 23 have Republican-controlled state governments, three have Democratic-controlled governments and five have divided governments.
Pennsylvania has a Democratic governor and Democratic-controlled House, while Republicans control the Senate.
Six states have either announced that they do not plan to participate or have had legislative efforts requiring participation fail: Hawaii, New Mexico, Oregon, Arizona, Wisconsin and Minnesota.
New York Gov. Kathy Hochul has said she intends to participate but is also waiting for additional federal regulations.
