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New Tax Credit Could Expand Access to Catholic Schools

· Confirmed

Faith Desk

In Short: Education leaders say the new federal tax credit could expand access to Catholic schools, potentially easing financial burdens on families.

The tax credit allows individuals to receive a dollar-for-dollar tax credit for donations up to $1,700 per year to scholarship granting organizations (SGOs), which can then award scholarships to K-12 students.

Sister Dale McDonald expressed hope that the tax credit would increase enrollment, stating, 'Certainly, we’re hopeful that it will have an impact on enrollment.'

The tax credit is designed to be flexible, allowing parents to give money to a school or diocese, but not to earmark it for a specific child. 'You can choose a school or you can choose a diocese if you want,' explained Peterson. 'The more funds that come in, the more that school is going to have scholarships to give out.'

The Treasury Department estimates that approximately 95% of American children live in households that meet the income limit for the scholarship tax credit, making it accessible to a broad range of families.

The tax credit eligibility extends to students whose prior-year household income is no more than 300% of the area’s median gross income, adjusted for family size.

Bishop David M. Cheeseman, president and CEO of the National Catholic Educational Association, highlighted the confirmation that married couples filing jointly will be able to claim up to $3,400 in tax credit for eligible contributions, increasing the potential funding available to support educational opportunities for America’s children.

The National Catholic Educational Association recorded that 6.6% of Catholic school students received Title I services during the 2025-2026 academic year.

The Archdiocese of Miami is applying to participate in the EFTC through its newly established Catholic Tax Credit Scholarship Fund of South Florida, and the Diocese of Sioux Falls, SD, is also exploring the potential benefits of the new tax credit.

The tax credit could lead to increased contributions to Catholic nonprofits that grant scholarships for K-12 students, potentially easing financial burdens on families.

The tax credit is part of a broader push for school choice, which has made significant gains since the first program was launched in Wisconsin in 1990.

The new tax credit could also help Catholic schools address the financial challenges posed by inflation, which has made it harder for middle-class families to afford Catholic school tuition.

The tax credit is expected to be a significant tool for expanding access to Catholic schools, potentially benefiting millions of children across the country.

What this adds

The tax credit is designed to be flexible, allowing parents to give money to a school or diocese, but not to earmark it for a specific child.

The tax credit eligibility extends to students whose prior-year household income is no more than 300% of the area’s median gross income, adjusted for family size.

Background

Education leaders say the new tax credit could expand access to Catholic schools, potentially easing financial burdens on families.

Pope Leo XIV called on Catholic schools to be supportive environments for young people.

What's confirmed

What's still developing

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