Educational Choice for Children Act of 2025

The "Educational Choice for Children Act of 2025" introduces new federal tax credits to incentivize charitable contributions towards K-12 education scholarships. It amends the Internal Revenue Code to allow individuals and corporations to claim a credit for donations made to qualified scholarship granting organizations . These organizations, which must be 501(c)(3) nonprofits, provide financial aid for a range of qualified elementary and secondary education expenses . For individuals, the credit is capped at the greater of 10 percent of adjusted gross income or $5,000, while corporations can claim a credit up to 5 percent of their taxable income. Both credits are subject to an annual national volume cap , starting at $10 billion, allocated on a first-come, first-served basis, with provisions for increases in high-demand years. To prevent double benefits, contributions claimed for this credit cannot also be deducted as charitable contributions. Scholarship granting organizations must meet specific requirements, including providing scholarships to multiple students, prioritizing returning students and siblings, and verifying household income, which must not exceed 300 percent of the area median gross income. They are also prohibited from earmarking contributions for specific students and must undergo annual independent financial audits. The bill mandates that these organizations distribute a significant portion of their receipts within a specified timeframe to maintain their qualified status. Furthermore, the legislation ensures that scholarships received by eligible students for qualified education expenses are excluded from their gross income. It explicitly prohibits federal, state, or local government entities from controlling or directing scholarship granting organizations or participating private and religious schools. The Act also safeguards parental rights to utilize these scholarships at various educational institutions and allows parents to intervene in legal challenges to the bill's constitutionality.