(The Center Square) \u2013 Pennsylvania\u2019s public school students could benefit from a new federal education tax credit program next year, but the state has yet to opt into it.\u00a0<\/p>\n
Thirty-one others have done so or announced plans to participate. Meanwhile, Gov. Josh Shapiro says he is waiting for additional federal guidance, as lawmakers seek out Pennsylvania\u2019s participation through legislation.<\/p>\n
The Federal Scholarship Tax Credit<\/a> program, or FSTC, 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.\u00a0<\/p>\n It establishes a new federal tax credit of up to $1,700 for contributions made by an individual to Scholarship Granting Organizations, or SGOs \u2013 nonprofits that accept qualified donations and use the funds to provide scholarships for education-related services at private or public schools.\u00a0<\/p>\n Should Pennsylvania opt out, residents could still claim the credit by contributing to an eligible SGO in a participating state, but those contributions would fund scholarships in that state rather than in Pennsylvania.\u00a0<\/p>\n Supporters argue that participation will allow Pennsylvania to tap into millions of dollars of private funding and point to polls indicating broad public approval.\u00a0<\/p>\n Conversely, groups like AFT Pennsylvania<\/a> have historically opposed tuition tax credits and voucher programs, arguing that such measures siphon resources and attention away from traditional public schools.\u00a0<\/p>\n The Commonwealth Foundation<\/a> has long advocated for changes to Pennsylvania\u2019s education funding system and greater school choice.\u00a0<\/p>\n Rachel Langan, the organization\u2019s senior policy analyst, told The Center Square that the federal scholarship tax credit opt in is a \u201cno brainer\u201d for Pennsylvania.\u00a0<\/p>\n \u201cIt\u2019s truly a win-win: students access more educational opportunities, and at no cost to the state or school districts,\u201d she said.<\/p>\n Langan said the program is truly life-changing, covering everything from tutoring and textbooks to special needs assistance, after-school programs and summer programs. She estimated that approximately 1.8 million Pennsylvania students \u2013 attending both public and private schools \u2013 are eligible for scholarships to afford things like supplemental education programs.<\/p>\n She said Pennsylvania already has much of the necessary infrastructure in place through its existing successful programs, so it would require minimal lift to get these new federal dollars flowing throughout the state.<\/p>\n \u201cFamilies want more options. We have tens of thousands of kids on waiting lists for better educational options that would benefit if Gov. Shapiro opts in. If he doesn\u2019t, donor dollars will only go to the 30+ states that are participating. \u00a0The choice could not be simpler: Pennsylvania must opt in,\u201d Langan said.\u00a0<\/p>\n A spokesperson for the Shapiro administration said the governor is \u201cawaiting federal guidance<\/a>” to address key questions about how this program would work, including which students will be eligible, how this federal initiative will interact with existing programs, and more.\u201d<\/p>\n The U.S. Department of the Treasury and the Internal Revenue Service expect to issue proposed regulations<\/a> by the end of September. The program becomes available January 1, 2027, when participating states are required to have submitted their lists of qualifying SGOs.\u00a0<\/p>\n