By: Fern Sidman

In what supporters are hailing as a transformative milestone for school choice in America, President Donald J. Trump signed the “One Big Beautiful Bill” into law on July 4, 2025 — a legislative package whose centerpiece includes the creation of a groundbreaking federal tax credit aimed at bolstering private and religious school education. This latest move, according to multiple reports, marks the most significant federal endorsement of school choice mechanisms in recent American history and is poised to reshape the education funding landscape nationwide.

The law’s school choice provision introduces a federal tax credit program designed to incentivize private donations to scholarship-granting organizations, which, in turn, provide tuition assistance and educational support to families seeking alternatives to the public school system. The precise mechanics of the program, as detailed in the bill, reflect a sweeping and ambitious federal commitment to expanding educational options for middle- and working-class families.

At the heart of the measure is a dollar-for-dollar federal tax credit — up to $1,700 annually — available to individual taxpayers who contribute to state-approved, federally recognized nonprofit organizations. These entities are tasked with distributing scholarships to eligible students in accordance with guidelines established by the law.

There is, notably, no federal cap on the aggregate amount of donations that can be funneled into these scholarship programs, effectively opening the door for large-scale philanthropic engagement in K-12 education. According to provisions within the bill, these scholarships are not restricted solely to tuition. They can be applied to a broad spectrum of educational expenses, including fees, tutoring, special educational therapies, transportation, technology needs, and even homeschooling costs.

The bill stipulates that families earning up to 300% of the median income in their respective regions will qualify for scholarship assistance. This income threshold, while generous, is deliberately structured to capture a broad swath of middle-income households — families that often earn too much to qualify for traditional need-based aid but too little to comfortably afford private or religious school tuition.

For advocates of school choice, including many within the Orthodox Jewish community, this income eligibility parameter is seen as a critical factor. According to a report that appeared in The Forward, the Orthodox Union labeled the passage of this legislation a “monumental win,” citing the profound impact it could have in making religious education, particularly yeshiva schooling, more financially accessible to observant Jewish families across the country.

While the program is federally authorized, participation at the state level remains entirely voluntary — a federalist compromise designed to navigate constitutional concerns and respect states’ rights over education policy. As ABC News has reported, if a state chooses not to opt into the program, families residing there will be ineligible for the scholarships, regardless of their financial circumstances or educational needs.

This opt-in structure has set the stage for what may become a patchwork of participation across the United States, with some states embracing the initiative enthusiastically, while others — particularly those with strong teachers’ unions or progressive leadership — may reject it outright. The political and educational implications of this divide will likely fuel debates in state legislatures over the coming months.

The program is scheduled to commence on January 1, 2027, giving states, scholarship-granting organizations, and taxpayers ample time to prepare for its implementation. Yet, as education policy analysts have noted, this runway may also provide a window for legal challenges or legislative pushback, especially in states wary of diverting potential resources away from public schools.

For many faith-based communities — particularly Orthodox Jewish organizations, Catholic dioceses, and evangelical Christian schools — the tax credit signals a new era of opportunity. The ability to bolster scholarship funds through incentivized private giving may unlock access to educational environments that align with families’ religious convictions and values, potentially reducing the financial strain that tuition often imposes.

As The Forward highlighted in its coverage, the Orthodox Union sees this legislation as a vehicle not just for school choice, but for strengthening religious education across the Jewish diaspora in America. By enabling more families to afford yeshiva education, the law could invigorate communities where Torah-based schooling is central to cultural and spiritual life.

Despite the celebratory tone among school choice proponents, the bill has drawn pointed criticism from public education advocates and some policy analysts. Critics argue that the tax credit system could inadvertently favor wealthier donors seeking tax breaks, while reducing the federal tax base and, by extension, potentially impacting funding for public education programs.

Moreover, skeptics warn that the influx of private funds into alternative education pathways may exacerbate educational inequality, particularly in underserved communities where public schools already struggle with resource shortages.

There is also concern about the accountability mechanisms for scholarship-granting organizations and the quality of education provided by some private or religious schools. As detractors have noted, private schools often operate under less stringent regulatory oversight than public institutions, raising questions about standards and educational outcomes.

Regardless of where one stands on the merits of the bill, there is little dispute that the “One Big Beautiful Bill” represents a seismic shift in federal education policy. By leveraging the tax code to foster private investment in education, the law underscores the Trump administration’s broader commitment to parental choice and market-driven solutions in the public sphere.

Whether this initiative will succeed in expanding access to high-quality education for all students — or merely serve to deepen existing divides in American schooling — remains a question only time can answer. Yet, as the program’s 2027 launch date approaches, one certainty prevails: the debate over school choice, equity, and the future of education in the United States has entered a new and highly consequential chapter.