To amend the Internal Revenue Code of 1986 to allow a credit against tax for charitable donations to nonprofit organizations providing education scholarships to qualified elementary and secondary students.
Latest action (28 Jan 2025): Introduced
What this bill does
Generate a neutral, plain-English explanation of what this bill does, who it affects and what happens next — grounded in the official text.
Official summary
Educational Choice for Children Act of 2025
This bill establishes a nonrefundable tax credit for contributions (cash or stock) made by an individual to a tax-exempt organization that provides scholarships for qualified elementary and secondary school expenses to eligible students (scholarship granting organization), subject to limitations.
Under the bill, the tax credit is limited to the greater of $5,000 or 10% of adjusted gross income.
Further, the bill establishes a $5 billion annual volume cap (for 2025-2028) for the tax credit (which may be increased under certain circumstances). The volume cap is allocated by the Department of the Treasury for the tax credit on a first-come, first-serve basis (based on the contribution date). However, under the bill, 10% of the volume cap must be divided evenly among states for allocation to individuals residing in those states.
The bill allows any portion of the tax credit that exceeds the individual’s tax liability (less certain other tax credits) to be carried forward for up to five tax years.
The bill also
• establishes specific requirements for a scholarship granting organization,
• requires a scholarship granting organization to distribute all contributions within a specific timeframe (exceptions apply), and
Common questions
- What does H.R. 817 do?
- Educational Choice for Children Act of 2025 This bill establishes a nonrefundable tax credit for contributions (cash or stock) made by an individual to a tax-exempt organization that provides scholarships for qualified elementary and secondary school expenses to eligible students (scholarship granting organization), subject to limitations. Under the bill, the tax credit is limited to the greater of $5,000 or 10% of adjusted gross income. Further, the bill establishes a $5 billion annual volume cap (for 2025-2028) for the tax credit (which may be increased under certain circumstances). The volume cap is allocated by the Department of the Treasury for the tax credit on a first-come, first-serve basis (based on the contribution date). However, under the bill, 10% of the volume cap must be divided evenly among states for allocation to individuals residing in those states. The bill allows any portion of the tax credit that exceeds the individual’s tax liability (less certain other tax credits) to be carried forward for up to five tax years. The bill also • establishes specific requirements for a scholarship granting organization, • requires a scholarship granting organization to distribute all contributions within a specific timeframe (exceptions apply), and • excludes from gross income scholarships received by an individual from a scholarship granting organization. Finally, the bill prohibits federal, state, and local government entities, officers, and employees from imposing requirements that prevent the use of scholarship funds for private or religious elementary or secondary education expenses or discouraging the use of scholarship funds at such education institutions.
- Has H.R. 817 become law?
- Not yet. As of 28 Jan 2025, H.R. 817 is introduced.
- Who sponsored H.R. 817?
- H.R. 817 was sponsored by Rep. Adrian Smith [R-NE3] (Republican-NE), with 27 cosponsors.
- What's the latest action on H.R. 817?
- Introduced (28 Jan 2025).
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