Illinois students could use donated money for a variety of educational expenses if the state opts into the Education Freedom Tax Credit program, also known as the Federal Scholarship Tax Credit.
Under the program, Illinois students in public and private schools could receive scholarship money to help them find a tutor, get special education services, attend ACT or SAT prep sessions, pay tuition, or get assistance with other academic needs.
That will happen only if Illinois allows the state’s schoolchildren to benefit from the EFTC by opting into the program.
Otherwise, money from Illinois donors will go to children in other states.
Here’s what you need to know about the program and how it would impact public and private school students throughout the state:
- The program benefits public and private school students.
- The program takes no money from public schools.
- Public schools can keep dedicated funds local.
- Illinois taxpayers can get the tax credit no matter what — rejecting the
program will only deprive kids of available funding. - Most states have already indicated they will opt into the program.
- The program has bipartisan support.
- The program provides additional resources to students with disabilities.
- Most Illinois voters support opting into the program.
What is the Education Freedom Tax Credit?
The Education Freedom Tax Credit is a federal program that provides a 1:1 tax credit of up to $1,700 annually for donors who contribute to K-12 student scholarships. Starting in 2027, students in public or private schools can access donor money for a variety of educational services.
Families must have an income of 300% or less of their area gross median income for their children to be eligible for the donor money.
What is the Educational Choice for Children Act?
The Educational Choice for Children Act is the federal legislation that created the Education Freedom Tax Credit. It was enacted into law in the “One Big, Beautiful Bill” on July 4, 2025. The tax credit will be administered by the U.S. Treasury Department and the Internal Revenue Service, with taxpayers able to begin making eligible donations in January 2027.
How does the $1,700 federal school choice tax credit work?
Individual taxpayers will receive a dollar-for-dollar federal income tax credit of up to $1,700 each year for donations to qualifying scholarship-granting organizations.
Those organizations use those donations to disburse funds to eligible students for eligible expenses. Unlike a tax deduction, which only reduces taxable income, a tax credit directly reduces the total federal income tax owed dollar-for-dollar.
- If Illinois opts in: Donated money flows directly to eligible Illinois students.
- If Illinois does not opt in: Illinois donors can still claim the federal tax credit by contributing to qualifying scholarship-granting organizations in participating states, but Illinois students cannot receive any of the donated money.
What education expenses are eligible under the Education Freedom Tax Credit?
The EFTC allows students to use scholarship funds for a variety of expenses, including:
- Tuition
- Fees
- Tutoring
- Services for students with special needs
- Books, supplies or other equipment
- Extended-day programs
- Computer technology, equipment or internet access
- Uniforms, transportation or room and board
For expenses such as tutoring, books and supplies, the expense must relate to the student’s K-12 education, but it does not have to be required by the student’s school.
Certain expenses such as uniforms, transportation, room and board and extended-day programs qualify only if the student’s school requires or provides it.
Who can get scholarships from the Education Freedom Tax Credit program?
Students whose family income is 300% or less of the area median income are eligible to receive funds from scholarship-granting organizations.
That means a significant share of Illinois families and students would be eligible for the federal school-choice program.
In Cook County alone, more than 822,000 students would qualify.
Combined, about 1.3 million students from Illinois’ five most populous counties — Cook, DuPage, Lake, Will and Kane — could receive support through the program.
Is the Education Freedom Tax Credit for public school and private school students?
The EFTC is for both public school and private school students.
Starting in 2027, students in public or private schools can use the scholarship money for educational services.
That means public school students who might be struggling in certain areas or who need extra help or materials won’t have to leave their local public schools to find the support or opportunities they need. Or their families could get tuition assistance to help send them to a private school if that better fits their needs.
The most recent state test scores for Illinois show only half of students were reading at grade level in spring 2025. Just 39% were proficient in math.
Illinois students are struggling. The scholarship program offers families a way to provide the academic support their children need, whether at home, at their local public school or at a private school.
How can the program help students with special educational needs?
The money can be used for educational therapies for students with disabilities enrolled in the public school system or in a private or home school.
The money can be used for special education services for students with disabilities enrolled in the public school system or in a private or home school.
Most students with disabilities enroll in public schools. In the 2024-2025 school year, nearly 375,000 students with disabilities were enrolled in public schools in Illinois.
Nationally, 95% of school-aged students with disabilities were enrolled in regular public schools in fall 2022, according to the National Center for Education Statistics. Only 2% were in regular private schools.
Will the Education Freedom Tax Credit take money away from public schools?
No, the program takes no funding away from public schools. It will not divert federal or state money from public schools to fund the scholarships.
Instead, the scholarships are donated by taxpayers, who will get a dollar-for-dollar federal tax credit for giving up to $1,700 each year. That credit will matter little to a billionaire but can benefit middle-income givers. Any taxpayer can receive the federal tax credit for a qualified contribution to a scholarship-granting organization, a tax-exempt organization that provides money to students.
That means the only cost to the federal government is minimal foregone income tax revenue. There is no cost to states, only the benefit of more help flowing directly to students.
Can donors keep their donated funds within their local community?
Yes. Donors can keep their dollars local by contributing directly to local public school foundations that qualify as scholarship-granting organizations or regional scholarship-granting organizations.
If Illinois opts into the program, taxpayers will have two options:
- Donate $1,700 to an eligible scholarship-granting organization and directly fund education.
- Send that money to the federal government via taxes for the government to use on any number of priorities or agendas.
The best way to help public education will be to donate to a local scholarship-granting organization, including eligible public school foundations. Those foundations already raise private donations to support their schools. A 1:1 tax credit would incentivize more of this giving, allowing public school foundations to expand their fundraising and increase the number of students they serve.
Has Illinois opted into the federal school choice program?
No, Illinois has not opted into the program.
So far, 31 states have indicated they will opt in, including six controlled by Democrats.
Gov. J.B. Pritzker must decide by Jan. 1, 2027, whether to opt Illinois into the program.
If he does not opt into the program, Illinois students will not get money donated by Illinoisans — students in other states will.
Education Week has a status tracker where readers can see an up-to-date map showing which states have opted into the program.
Is the program popular among Illinoisans?
Nearly 55% of 579 registered Illinois voters favor the state opting into the Education Freedom Tax Credit program.
Only 22% oppose the move.
The voters were polled Feb. 9-11 by M3 Strategies for the Illinois Policy Institute.
The poll also showed more support for opting in than opposition across all ages, regions, races and political ideologies.
Why are teachers unions opposed to the Education Freedom Tax Credit?
Teachers unions claim the program diverts money from public education. That’s incorrect, because the program uses zero public education funds and is open to public school families for tutoring and enrichment support.
Teachers unions have long opposed programs that give families more opportunities to choose the education that best fits a child’s needs. When just half of students can read at grade level and even fewer are proficient in math in Illinois’ public schools, it’s no wonder teachers unions are uncomfortable with programs that give families options beyond their traditional public schools.
But the EFTC promises to help families who choose public schools, too.
Why are some governors refusing to opt their states into the EFTC program?
Here are some common myths about the program:
Myth No. 1: The scholarships take money away from public schools.
Reality: The program takes no state or federal money from public schools because it is completely funded by private donors.
Myth No. 2: The scholarships help only private school students.
Reality: Public school students can get money to pay for tutoring or other academic enrichment.
Myth No. 3: Rejecting the program would be rejecting a tax break for the rich.
Reality: The federal tax credit is capped at just $1,700 each year, and the credit can be claimed by Illinois donors even if the state doesn’t opt in.
Myth No. 4: The scholarships will mostly benefit high-income families.
Reality: The scholarships will level the playing field to give every family, including lower-income families, access to the educational offerings high-income families can already afford.
The bottom line: Illinois families in public or private schools could benefit from the donated scholarship funds. Taxpayers will get credit for their donations no matter what.