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New Federal Tax Credit Could Expand Catholic School Access

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.

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Sister Dale McDonald, vice president of public policy for the National Catholic Educational Association (NCEA), expressed hope that the tax credit would impact enrollment, noting that during 2025-2026, only 6.6% of Catholic school students received Title I services.

The tax credit allows individuals to claim a dollar-for-dollar federal income tax credit of up to $1,700 each year for qualified contributions, with married couples filing jointly able to claim up to $3,400.

According to the Treasury Department, approximately 95% of American children live in households that meet the income limit for the scholarship tax credit.

The tax credit requires that scholarship eligibility be extended 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. Peterson of the Diocese of Sioux Falls, SD, highlighted the transformative potential of the tax credit, stating it would create opportunities for families to access resources to expand their educational options.

The tax credit is expected to benefit Catholic schools, which have faced financial challenges due to inflation and the middle-class squeeze, as Greg Richmond, superintendent of the Archdiocese of Chicago school system, noted.

The Archdiocese of Miami is applying to participate in the EFTC through its newly established Catholic Tax Credit Scholarship Fund of South Florida, with schools like St. Bonaventure Catholic School currently at or near capacity.

The decision on participation could shape how school choice and scholarship opportunities develop for students and families, affecting educators, advocates, and community organizations across the country.

What this adds

The tax credit could potentially ease financial burdens on families by providing substantial scholarships for low-income students.

The tax credit is part of a broader push for school choice, which has gained momentum over the past decade.

The tax credit is expected to benefit Catholic schools, which have faced financial challenges due to inflation and the middle-class squeeze.

Background

Education leaders say the new federal 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

Sources