RALEIGH — The White House and top officials in the Trump administration are calling on governors to opt in to President Donald Trump’s school choice federal tax credit program.
“The Trump Administration is delivering the largest national investment in education choice through the Education Freedom Tax Credit, now supported by nearly half of America’s governors from both sides of the aisle,” U.S. Secretary of Education Linda McMahon said in a press release.
“The Working Families Tax Cuts created the first-ever federal tax credit for K-12 scholarships at his direction and I congratulate the Governors who have worked to provide greater access to education and educational programs for millions of Americans,” said U.S. Secretary of the Treasury Scott Bessent. “I encourage those who have not opted in to act immediately.”
The White House also launched a website showing which states have opted in and which have not. So far, 23 states have opted in, but North Carolina is not on that list and is the only state in the Southeast yet to opt in.
Under the One Big Beautiful Bill (OBBB), the Education Freedom Tax Credit is a federal tax credit for individuals contributing to scholarship granting organizations (SGOs).
The White House website also says the credits through SGO organizations can be taken advantage of beginning Jan. 1, 2027, but “families cannot receive a scholarship if their governor blocks their state’s participation.”
Following passage of the OBBB, Senate Leader Phil Berger (R-Eden) ran a bill to opt North Carolina into the program called the Educational Choice for Children Act. The bill passed both chambers and was sent to Gov. Josh Stein on Aug. 1, 2025.
The governor vetoed the bill on Aug. 8, stating that while school choice is “good for students and parents,” Congress and the Trump administration “should strengthen our public schools, not hollow them out.”
“Once the federal government issues sound guidance, I intend to opt North Carolina in so we can invest in the public school students most in need of after school programs, tutoring, and other resources,” Stein wrote in his veto message. “Therefore, HB 87 is unnecessary, and I veto it.”
In a Dec. 12, 2025, press release, the U.S. Treasury and Internal Revenue Service issued guidance. After the guidance was issued, North State Journal emailed the governor’s office about the program, including two inquiries since Jan. 8, but has not received a response.
Parents for Educational Freedom in North Carolina (PEFNC), a nonprofit that has helped expand school choice in the state, applauded Berger’s bill, noting the “requirement for states to opt-in was added at the 11th hour and put a barrier in front of many states, including ours.”
PEFNC has not yet announced official plans to vie to become an SGO, but nationally the American Federation for Children has announced the launch of the AFC Scholarship Fund, described as a “national scholarship granting organization (SGO) with over $10 million in generous funding” obtained through an “ambitious national awareness campaign.”
Trump’s school choice tax credit comes with rules for SGOs and eligibility guidelines.
SGOs must be a 501(c)(3) organization, maintain separate accounts for qualified contributions, spend at least 90% of its income on scholarships and going forward must prioritize students who previously received the credit or have siblings who did.
SGOs also must meet strict requirements like annual audits by independent certified public accountants and make sure scholarships aren’t awarded to disqualified individuals to prevent “self-dealing.”
U.S. citizens or residents can claim up to $1,700 annually for cash contributions to SGOs that fund scholarships for eligible K-12 students in participating states.
Students eligible must be from households with incomes up to 300% of the area median gross income and are eligible for public school enrollment. U.S. Census Bureau data for 2023 puts the average median family income in North Carolina at $70,804, meaning an eligibility range of up to $212,400.
The U.S. Senate altered language for the tax credit before Trump signed the bill, dictating SGO selection to be made “by the Governor of the state or by another individual, agency, or entity designated under state law to make such elections on behalf of the state with respect to federal tax benefits.”
