HR-2798-119
Referred to the House Committee on Ways and Means.
Sponsored by Claudia Tenney (R-NY)
What it does
This bill would create a new federal income tax credit (IRC §25F) equal to 75% of charitable donations made to qualifying charter school organizations, capped at the greater of $5,000 or 10% of the donor's adjusted gross income per year. Qualifying organizations must be 501(c)(3) nonprofits that are either federal grant recipients for high-quality charter school expansion or are ranked in the top 10% of charter schools in their state by student performance. The total nationwide credit would be capped at $5 billion per year starting in 2026, allocated first-come, first-served, with $10 million reserved per state and an automatic 5% increase mechanism if 90% of the cap is claimed.
Who benefits
Individual taxpayers who donate to qualifying charter schools and can claim the 75-cent-per-dollar credit, particularly higher-income donors who itemize and have larger tax liability to offset. Qualifying charter management organizations and charter schools that would receive an influx of private donations incentivized by the credit. Students and families in areas served by expanding charter schools, particularly in underserved communities where charter schools may offer alternatives to lower-performing district schools. Charter school employees who would benefit from organizational growth and expansion funding. States with strong charter sectors that could attract more private capital.
Who is hurt
Traditional public school districts that may lose students — and the per-pupil funding that follows them — to expanding charter schools. Taxpayers broadly, who would bear the cost of reduced federal revenue from the credit. Donors who contribute after the annual $5 billion cap is reached and cannot claim the credit. Lower-income donors who lack sufficient tax liability to fully utilize the credit. Charter school organizations that do not meet the "top 10%" or federal grant eligibility thresholds and are excluded from the program. States without robust charter authorization frameworks, whose residents may have fewer qualifying organizations to donate to.
Supporters argue
Supporters argue that directing private capital toward high-performing charter schools — those already vetted by federal grants or state performance rankings — ensures accountability while expanding access to quality education for students who may be trapped in underperforming district schools. They contend that similar state-level scholarship tax credit programs have demonstrated measurable increases in private funding for school choice without requiring direct federal appropriations, and that the $5 billion annual cap, expenditure requirements, and independent audit mandates build in meaningful fiscal guardrails against misuse.
Opponents argue
Opponents argue that a 75% federal tax credit is functionally equivalent to a federal subsidy, diverting up to $5 billion annually in tax revenue away from public coffers toward privately managed institutions with limited public accountability. They contend that research on charter school outcomes is mixed — a 2023 Stanford CREDO study found wide performance variation across charter schools — and that the bill's eligibility criteria favor already-resourced organizations while accelerating per-pupil funding losses for traditional public schools that serve the majority of American students.