HB1 WILL BRING MORE FEDERAL EDUCATION DOLLARS TO KENTUCKY’S PUBLIC SCHOOLS

HB1 WILL BRING MORE FEDERAL EDUCATION DOLLARS TO KENTUCKY’S PUBLIC SCHOOLS

Kentucky failing to opt in to federal tax credit program will send Kentucky’s education dollars to other states

This week the General Assembly passed House Bill (HB) 1, legislation for Kentucky to formally opt-in and participate in the federal education tax credit program.  

Under this program, taxpayers may contribute up to $1,700 to a scholarship granting organization (SGO). Those organizations then provide scholarships or assistance to families with children in K-12 public or private schools for approved educational expenses such as tuition, fees, tutoring, special needs services, books, supplies, technology, and transportation. In return, the taxpayer receives a dollar-for dollar federal tax credit, up to $1,700, reducing what they would otherwise send to Washington. 

Federal law requires states to affirmatively opt in to participate. To date, 23 governors have chosen to do so, and additional states are expected to follow. Even in states that decline to opt in, taxpayers may still contribute to SGOs in participating states and receive the federal tax credit, meaning those charitable dollars would simply flow elsewhere. 

This exciting opportunity is receiving bipartisan support, as evidenced by Colorado Governor Jared Polis, also a Democrat and potential 2028 presidential candidate:

“I think most, if not all, Democratic governors will get there as they learn about the chance to boost charitable contributions in their state.  If there are states that don’t, for some reason, people in those states can still give to charities in states like Colorado.  In other words, taxpayers everywhere will be able to get the tax credit.  But if a particular state doesn’t opt in, then the donors in that state would be giving out of state.  I do believe states will opt in as they see the opportunity for additional donations to help at-risk kids and middle-class kids in their state…I think many of them will choose to do it because it’s free money.” 

The federal education tax credit presents a historic opportunity for Kentuckians to direct dollars that would otherwise go to Washington toward students and families in their own communities. Children in struggling schools could receive additional support. Public school leaders and advocates may establish SGOs to generate new scholarship funding and resources. As one House member, a public school teacher, noted during debate, “If we are very intentional, we can ensure that this money can transfer to our public education students…it’s really powerful.” 

I am grateful that federal law provides Kentucky a clear, voluntary option to participate, and the General Assembly moved swiftly to ensure we do not leave this opportunity on the table. If we fail to act, those charitable dollars will simply flow to other states. I urge the Governor to sign HB 1 and encourage leaders statewide to help educate families about its potential. When fully understood and embraced, this program can provide meaningful support for Kentucky students and families.