Tucked into the sweeping “One Big Beautiful Bill” — a package that includes the largest federal tax cut in decades — is a potentially transformative measure: the first-ever federal tax credit for school choice.
North Carolina is already a national leader in educational freedom through its Opportunity Scholarship Program (OSP), which supports school choice regardless of family income. With this new federal provision, tens of thousands more families could send their children to the school of their choice without drawing from state revenue.
A POWERFUL INCENTIVE FOR PRIVATE SUPPORT
The new federal measure offers a dollar-for-dollar tax credit of up to $1,700 for individuals who donate to qualified scholarship-granting organizations (SGOs). These nonprofits, in turn, use the funds to help families pay for private school tuition, tutoring, and other related expenses. It’s a smart, incentive-driven model that empowers taxpayers to invest directly in children’s futures — broadening education funding beyond traditional government budgets.
While the proposal is exciting for school choice advocates, it also brings challenges. Many rightly worry that any involvement from the federal government — even in the form of tax credits — may come with strings attached. History shows that government aid can morph into government control, reshaping education in ways that may compromise parental autonomy. For true educational freedom, reforms must be led by states — not Washington.
THE RISK OF FEDERAL OVERREACH
As pointed out in a recent Reason Foundation article, a federally run tax credit program could become a vehicle for national mandates. Education policy analysts Aaron Garth Smith and Christian Bernard warn that it may become a “one-stop shop for Congress to impose nationwide mandates on private schools.” These could include testing requirements, curriculum constraints, admissions standards, and other intrusive measures — especially under future political majorities.
NORTH CAROLINA’S OPPORTUNITY AND RESPONSIBILITY
North Carolina lawmakers must weigh these risks as they consider legislation to opt into the program. The state’s Opportunity Scholarship Program — launched in 2013 — has become a national model. Recent legislative action to remove income caps and expand eligibility has unlocked private education options for thousands more students.
Yet demand is soaring. State funds alone may not be enough to sustain the growing interest. If the federal tax credit allows scholarship-granting organizations to access new streams of private donations, it could become a fast lane for thousands of families to find the right educational fit — without burdening state coffers. According to a John Locke Foundation analysis, OSP saved the state more than $10 million last year by easing public school costs.
EMPOWERING FAMILIES, NOT BUREAUCRACIES
The federal tax credit supports private donations — not public funding — and scholarships would be distributed by nonprofits as they see fit. This preserves autonomy for both donors and families and expands access without triggering additional government oversight.
The program could be especially meaningful for rural families, who could use scholarships to help start new schools or access better options. Students with special needs could benefit from specialized services tailored to their learning styles — without waiting on another round of state appropriations.
School choice has never been about abandoning public education. It’s about ensuring that every child can learn in an environment where they thrive and parents decide. With the tools now available through the One Big Beautiful Bill, North Carolina has the chance to lead once again in education innovation.
Let’s read the fine print but see this as an opportunity to expand educational freedom.
