Keep Public Funds in Public Schools Act of 2026
- Sponsor
- Rep. Moore, Gwen [D-WI-4]
- Committees
- Ways and Means Committee (primary)
- Last action
- Jun 11, 2026
Bottom line
The bill eliminates federal tax incentives for donations to private school scholarship organizations, aiming to redirect resources towards public education.
What it actually does
This bill repeals two sections of the Internal Revenue Code of 1986: Section 25F, which provides a tax credit for contributions made by individuals to scholarship granting organizations (SGOs), and Section 139K, which excludes certain scholarships provided by SGOs from gross income. The changes would apply to taxable years ending after December 31, 2026, and to amounts received after that date for the income exclusion.
Proponents argue
Proponents argue that federal tax credits for private school scholarships divert public funds and resources away from public schools, which serve the vast majority of students. They contend that repealing these credits would strengthen public education by ensuring that tax dollars are primarily invested in the public school system, promoting equity and access for all students.
Opponents contend
Opponents argue that these tax credits provide crucial support for scholarship granting organizations, enabling low-income and middle-class students to access educational choices that might otherwise be unavailable to them. They contend that repealing the credits would limit educational options, disproportionately harming disadvantaged students who rely on these scholarships to attend private schools.
The bill text is very short and straightforward, making it highly accessible for a quick read and understanding of its direct effects.
Section 2(a)
Repeal of Tax Credit for Contributions to Scholarship Granting Organizations
This provision eliminates Section 25F of the Internal Revenue Code, which currently allows individuals to claim a tax credit for contributions made to qualified scholarship granting organizations. By striking this section, the federal government would no longer offer a tax incentive for these donations, effectively increasing the net cost of such contributions for donors.
Supporters argue
Supporters argue that this repeal will prevent federal tax dollars from indirectly subsidizing private education, thereby strengthening the financial base of public schools. They believe it aligns federal tax policy with the goal of investing in universal public education.
Critics contend
Critics contend that removing this tax credit will reduce charitable giving to SGOs, making it harder for students, especially those from low-income families, to afford private school tuition. They argue it limits parental choice and access to diverse educational environments.
Tradeoffs
This provision balances the principle of supporting public education through tax policy against the desire to provide educational choice and support private scholarship programs for students.
Section 2(b)
Repeal of Exclusion from Gross Income for SGO Scholarships
This provision eliminates Section 139K of the Internal Revenue Code, which currently allows certain scholarships provided by scholarship granting organizations to be excluded from a recipient's gross income. With this repeal, such scholarships would become taxable income for the recipients, potentially increasing their tax burden.
Section 2(c)
Effective Date
This section specifies that the repeal of the tax credit (Section 25F) will apply to taxable years ending after December 31, 2026. The repeal of the gross income exclusion (Section 139K) will apply to amounts received after December 31, 2026, in taxable years ending after that date. This provides a clear timeline for when the changes will take effect.