Idaho has taken a significant step forward in expanding educational opportunity by joining the nation’s first federal education choice tax credit scholarship program. Last week, Gov. Brad Little reinforced the state’s commitment to education choice by announcing Idaho’s participation, placing the state alongside Virginia, Nebraska, Arkansas and Alabama as early adopters of this landmark federal initiative.
The new program was created as part of the One Big Beautiful Bill Act (OBBA) and represents a historic shift in federal education policy. For the first time, federal tax law establishes a permanent federal income tax credit of up to $1,700 per year for individuals who make cash contributions to qualifying non-profit Scholarship Granting Organizations (SGOs). Unlike traditional deductions, this incentive provides a full dollar-for-dollar tax credit, making it one of the most generous federal tax incentives currently available.
The structure of the federal tax credit is designed to encourage broad participation from donors nationwide while maximizing benefits for students and families. Individuals may donate to approved SGOs and receive a tax credit equal to the full amount of their contribution, up to the annual cap. These organizations, in turn, distribute scholarships to eligible K-12 students to support a wide range of educational needs.
Importantly, the OBBA does not limit the amount of scholarship funding a single family may receive, nor does it restrict families to one program. Idaho families may continue to benefit from state-based initiatives such as Idaho’s Parental Choice Tax Credit while also combining those resources with scholarships funded through the new federal tax credit. This layered approach allows families greater flexibility to customize educational solutions that best meet their student’s needs.
All students in participating states stand to benefit from the program. SGOs may award scholarships not only for private school tuition, but also for supplemental educational expenses, including software, tutoring, specialized services, and educational technology. This means that students enrolled in public, charter, private, or religious schools may use scholarship funds to address learning gaps and enrichment opportunities.
However, participation in the program is not automatic. While taxpayers nationwide may donate to approved SGOs, students must live in a state that has formally opted in to receive scholarship funds. Oregon, Wisconsin, and New Mexico have already declined to participate, effectively reducing educational resources available to students due to political disagreements.
To participate, states must notify the Internal Revenue Service of their decision to opt in by January 1, 2027, and must also submit a list of eligible SGOs to the U.S. Treasury Department before scholarships may be awarded under the OBBA. States that fail to take these steps will leave students and families unable to benefit from the federal program, regardless of donor interest
By opting in early, Idaho ensures that its students and families will have access to this new stream of educational support. Governor Brad Little’s leadership reflects an understanding that families deserve access to every available educational resource, especially those funded through voluntary charitable contributions. Participation in the federal tax credit scholarship program comes at no cost to Idaho taxpayers while expanding educational options across the state.
Idaho’s decision signals a continued commitment to empowering parents, supporting students with diverse learning needs, and encouraging innovation across all sectors of education. By embracing the federal education tax credit scholarship program, the state is helping set a national example of how federal and state policies can work together to expand opportunity, strengthen educational outcomes, and put families first.
All states and governors should be participating because parents and students deserve this education choice option.
