42 million married couples could claim new $3,400 tax credit, potentially funding millions of school choice scholarships

More than 42 million married couples could claim the full $3,400 through the Education Freedom Tax Credit (EFTC), potentially adding billions of dollars to school choice scholarships, a new analysis finds.

The American Federation for Children (AFC) analyzed data following the Treasury Department’s release of rules for the credit, which takes effect Jan. 1, 2027. 

All taxpayers can receive a credit of up to $1,700 for donations to scholarship granting organizations. The clarification that married couples filing jointly can claim the full $3,400 further boosts the program’s potential. 

“The Education Freedom Tax Credit has the potential to transform education for millions of children, and Treasury’s latest guidance brings us one step closer to realizing its full impact,” said Tommy Schultz, CEO of AFC, in a release.

Dr. Patrick Graff, AFC Growth Fund senior fellow, found that if 10% of eligible couples claimed the credit, the contributions could potentially fund more than 2 million scholarships for students in the 31 states that have opted into the program or intend to join. Other states are still considering whether to participate.

The number of scholarships would depend on their value, which scholarship organizations (SGOs) in each state will set. At $7,000 each, 10% participation could fund more than 1 million scholarships; at $3,500 each, it could fund more than 2 million, Graff found. 

The tax credit, which passed as part of President Donald Trump’s One Big Beautiful Bill Act in 2025 and was championed by Sen. Ted Cruz, R-Texas, and others, has the potential to greatly expand school choice.

More than 1.5 million students currently participate in school choice programs across 34 states. The credit is expected to add at least two states – Colorado and New York – that lack school choice programs, while further expanding options in states that already have them. The scholarship is stackable, meaning current school choice participants can receive money for additional expenses.

The scholarships will be available to public and private school students and can be used for private school tuition, tutoring and other educational expenses. More than 90% of U.S. K-12 students are eligible, AFC found, based on family income limits set at 300% of the median local income, which varies by region. Family size will also be factored into the limits.

Earlier estimates projected nearly $19 billion in donations if just 10% of eligible taxpayers participated, according to previous Heartlander News reporting. That number could rise to $26.3 billion now that married couples can claim a combined $3,400 credit.

Graff and others said the new rules resolve most remaining questions about the program, allowing families, organizations and states to prepare to participate.

“This new tax credit puts education philanthropy within reach of nearly every American taxpayer,” Graff said, adding that employer-facilitated payroll deductions qualify for the credit. “The rules make it easier for taxpayers across income levels to contribute through their paychecks without reducing their monthly take-home pay.”