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H.R. 833: Educational Choice for Children Act of 2025

The Educational Choice for Children Act of 2025 is a proposed piece of legislation that aims to amend the Internal Revenue Code. The key purpose of this bill is to provide tax incentives for individuals and corporations that make charitable contributions to organizations that grant scholarships for elementary and secondary education. Here’s a breakdown of its major features:

Tax Credits for Donations

The bill establishes a tax credit for contributions made to qualified scholarship granting organizations. Key points include:

Individuals: Individuals can receive a credit against their taxes that is equal to the amount they contribute to these organizations, with some limitations. The maximum credit cannot exceed either 10% of the individual’s adjusted gross income or $5,000 per year.
Corporations: Corporations can similarly receive a tax credit for contributions, capped at 5% of their taxable income for that year.

Eligibility Criteria

To qualify for these credits, the following conditions must be met:

Income Limit for Students: Eligible students for these scholarships must come from households with incomes not exceeding 300% of the area median gross income and must be eligible to enroll in public schools.
Qualified Contributions: Contributions eligible for the credit must be charitable donations in cash or marketable securities specifically designated for scholarship purposes.
Scholarship Granting Organizations: Organizations that issue these scholarships must be non-profits listed under section 501(c)(3) of the Internal Revenue Code and must primarily provide scholarships for education expenses.

Qualified Education Expenses

The bill delineates what constitutes qualified elementary or secondary education expenses:

Tuition and fees related to enrollment in public or private schools.
Costs for curricular materials and books.
Payments for tutoring services by qualified educators.
Expenses for educational tests and dual enrollment in higher education.
Fees for educational therapies for students with disabilities.

Volume Cap on Tax Credits

The bill imposes a volume cap of $10 billion on the total amount of tax credits allowable for contributions made under the new provisions in any given year. A portion of this cap is reserved for individual states, ensuring a more equitable distribution across the country.

Regulations on Scholarship Granting Organizations

Scholarship granting organizations will be required to meet specific regulations to maintain their status and ensure compliance:

They must provide scholarships to a minimum of two students, with no two students attending the same school using the same grant.
They cannot earmark contributions for specific students and must ensure contributions are verified as eligible for the tax benefits.

Exemption from Income Tax

Moreover, amounts provided to students via scholarships will not count as gross income for tax purposes, meaning families receiving these scholarships won’t be taxed for them.

Non-Governmental Control

Importantly, the bill includes provisions that prohibit any form of governmental control over scholarship organizations and the schools they support, ensuring that educational choices remain in the hands of families and educators rather than government entities.

Effective Date

The provisions of this legislation would begin to take effect for taxable years starting after December 31, 2025.

Relevant Companies

None found.

This is an AI-generated summary of the bill text. There may be mistakes.

Actions

2 actions

Date	Action
Jan. 31, 2025	Introduced in House
Jan. 31, 2025	Referred to the Committee on Ways and Means, and in addition to the Committee on Education and Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Corporate Lobbying

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