New tax credit offers 75 cents back per dollar given to charter schools

What does this do?

HR 2798 creates a federal tax credit equal to 75 cents for every dollar donated to qualifying charter schools or charter school management organizations. The credit is capped at the larger of 10 percent of the donor's yearly income or $5,000. A nationwide annual limit of $5 billion in total credits applies, distributed on a first-come, first-served basis for donations made after December 31, 2025.

Who does it affect?

Individual taxpayers who itemize or carefully plan their taxes and wish to support charter school growth are the primary people affected. Charter school organizations that meet the eligibility requirements are also directly affected, as are students and families in areas where new or expanded charter schools may open.

Why does it matter?

Increased private funding directed through this credit could lead to the creation or expansion of charter schools in various locations. Public school systems may see indirect effects if students shift to charter schools that grow as a result of this new funding stream.

What does it cost, and who pays?

• Up to $5B in credits per year
• 75¢ credit per $1 donated
• Cap: 10% of income or $5,000