Federal Tax Credit Scholarship Improvement Act

S. 5322 — Federal Tax Credit Scholarship Improvement Act

This bill would amend the Internal Revenue Code's tax credit for qualified elementary and secondary education scholarships. It sets the maximum credit a taxpayer can claim at $1,700 per year, doubled to $3,400 for married couples filing a joint return. It also adds an annual inflation adjustment starting with tax years after 2026, tied to the existing cost-of-living formula used elsewhere in the tax code, with any increase rounded to the nearest $50. The Treasury Secretary would be required to publish the updated dollar limit by November 1 each year for the following tax year.

The bill affects individual taxpayers who claim this scholarship-related tax credit under Section 25F of the tax code, particularly married couples, who would newly receive a doubled limit compared to single filers under the amended structure. The changes would apply to tax years beginning after December 31, 2025.

The bill was introduced in the Senate on August 6, 2026, by Sen. Cindy Hyde-Smith, read twice, and referred to the Senate Committee on Finance. As with most introduced bills, it would need to be considered and approved by the committee, then pass the full Senate and House, before being sent to the President to become law.

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