HR-9289-119
Referred to the House Committee on Ways and Means.
Sponsored by Gwen Moore (D-WI)
What it does
This bill would repeal two provisions of the Internal Revenue Code added in a prior Congress: (1) a tax credit (Section 25F) that allows individual taxpayers to reduce their federal tax bill by donating to "scholarship granting organizations" (SGOs) — nonprofits that fund private school tuition; and (2) a related income exclusion (Section 139K) that allows scholarship recipients to exclude those funds from their gross income. Both changes would take effect for tax years ending after December 31, 2026.
Who benefits
Public school systems and districts, which supporters argue would retain a larger share of the federal tax base. Teachers' unions and public school advocacy groups. Taxpayers who do not use private schools and who may benefit if the eliminated credit reduces pressure on the federal deficit. State and local governments that fund public schools through tax revenue.
Who is hurt
Individual donors who currently claim the Section 25F credit and would lose that tax reduction. Scholarship granting organizations (SGOs) that rely on donor contributions incentivized by the credit, and which may see reduced donations. Low- and middle-income families who use SGO scholarships to afford private or religious school tuition — particularly those who cannot afford tuition without scholarship assistance. Private and religious schools whose enrollment may depend on scholarship-funded students. Students currently receiving SGO scholarships who may lose funding after 2026.
Supporters argue
Supporters argue that the Section 25F credit effectively redirects federal tax revenue away from public schools toward private institutions, undermining the public education system that serves the vast majority of American students. They contend that tax credits for SGO donations function as a backdoor voucher program — one that disproportionately benefits wealthier donors who itemize or claim credits, and that the public has no accountability over how private schools receiving scholarship funds operate or whom they serve.
Opponents argue
Opponents argue that the SGO tax credit expands educational options for lower-income families who otherwise could not afford private or religious schooling, and that repealing it would eliminate scholarships for students who depend on them mid-enrollment. They contend that the credit costs the federal government less than direct spending programs while empowering families — not bureaucracies — to choose the educational environment that best fits their children's needs, and that eliminating it restricts parental choice without evidence that it harms public school funding.
Constitutional context
The Origination Clause (Art. I, §7, cl. 1) requires revenue bills to originate in the House; this bill was introduced in the House and referred to the Ways and Means Committee, satisfying that requirement. The Taxing and Spending Clause (Art. I, §8, cl. 1) gives Congress broad authority to modify tax credits. No active constitutional tension is raised by a straightforward repeal of an existing tax credit provision.
Checks and balances
Congress would reduce a tax benefit currently available to individual taxpayers; the IRS would implement the change through updated filing rules, and taxpayers could challenge retroactive application under the Due Process Clause of the Fifth Amendment if any ambiguity arose, though the bill's effective date is prospective.
Historical precedent
Congress has repeatedly modified or repealed education-related tax provisions, including changes to the Coverdell Education Savings Account rules and the expansion of 529 plans under the Tax Cuts and Jobs Act of 2017, though no direct federal SGO credit existed before Section 25F was enacted.