A new analysis from the American Federation for Children sheds light on how the federal education tax credit could impact students in covered states, including North Carolina. AFC estimates that 51.7 million students nationwide, or 91.7%, are eligible to receive a scholarship.
North Carolina became a “Covered State”–participating in the tax credit– when the General Assembly overrode Governor Stein’s veto of House Bill 87, “Educational Choice for Children Act” in June. The state is one of 31 that have opted in so far, according to AFC.
Here’s some background on how the scholarship works, according to a press release from the U.S. Treasury Department:
Scholarship-granting organizations that are included on one or more state SGO lists can receive qualified contributions from taxpayers and use those funds to provide scholarships for eligible students. Taxpayers who make qualified contributions may claim a federal tax credit, subject to applicable statutory requirements and forthcoming Treasury and IRS guidance.
And here are some early takeaways about impact directly from the AFC report:
- Eligibility is near-universal in every state. The eligible share ranges from 85.9% (District of Columbia) to 96.2% (Maine).
- 31 states have opted in, home to 30.9 million eligible students (59.8% of the national total).
- 20.8 million eligible students are waiting in the 19 states and DC that have not yet decided.
- … Most families qualify. The income limit is 300% of area median income, which ranges from … $234,000 to nearly $500,000 for a family of four, depending on location.
What about North Carolina impacts?
According to AFC, 92.7% of the state’s students are eligible–nearly 1.7 million students. Take a look at the AFC chart of state-by-state eligibility.
Screenshot from the AFC report (“A Once-in-a-Generation Opportunity for National School Choice”).
Public charter school families are eligible to participate. This fact sheet from the U.S. Department of Education notes the following uses:
Scholarships can be used for any qualified education expense of an eligible student, which includes a broad set of expenses incurred in connection with or required by any K-12 public, private, or charter school. Examples include tuition for students to attend private schools of choice, tutoring at public schools, and support services for students with disabilities.
Read more about preview guidance from the U.S. Treasury Department in this Coalition blog post.
Above: Shutterstock photo.
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