Blog

We keep you up to date on the latest tax changes and news in the industry.

$5 Billion Voucher Plan Sparks Controversy: Impacts on Public Education and Tax Legislation

On May 22, 2025, the U.S. House of Representatives narrowly passed the One Big Beautiful Bill Act, pivotal to President Donald Trump's agenda, with a 215-214 vote, spotlighting Congress's internal divisions. The bill now moves to the Senate for impending scrutiny.

The legislation seeks to cement prior tax cuts from Trump's initial term, alongside fresh reductions, notably exempting tips and overtime pay from taxation. Social programs face severe revisions, such as heightened work prerequisites for Medicaid and SNAP, while clean energy tax credits face elimination. Substantial finances are earmarked for border safety and defense initiatives.

Image 1

Mechanics of the Voucher Program

The proposal advocates a $5 billion annual initiative leveraging the federal tax code to galvanize contributions to Scholarship Granting Organizations (SGOs). Contributors to these SGOs receive a dollar-for-dollar federal tax credit, surpassing conventional charitable donation incentives. As noted by NPR, SGOs would convert these donations into scholarships, aiding families with diverse educational expenses, including tuition for private schooling, textbooks, and homeschooling investments.

Senator Bill Cassidy (R-La.) remarked, "Empowering parents to select the optimal education for their children actualizes the American Dream."

Image 2

Debate: Support and Criticism

Proponents proclaim the initiative endows families, especially in underperforming districts, with educational alternatives, framing it as "education freedom." Conversely, critics, including Sasha Pudelski of the AASA, decry potential resource redirection from public schools and tax shelters benefitting affluent donors. Pudelski cautioned that the proposal "magnifies existing issues in voucher programs, namely waste, fraud, and abuse."

Detractors also warn of probable tax evasion, with affluent individuals bypassing capital gains tax by donating appreciated stock to SGOs, yet retaining the full tax credit.

Image 3

Consequences for Public Education

Public education defense groups, per the Campaign for Children, argue the proposal risks public school systems by rerouting funds to private entities, potentially worsening education equality and quality for the vast majority of public school-attending students. An OSBA report highlights urgent alternative solutions for advancing opportunities for 90% of U.S. students rooted in public schooling systems.

Currently, the Senate evaluates the proposal, yet it remains unenacted. Through budget reconciliation, it could potentially pass with a mere majority, circumventing bipartisan endorsement, although facing stark opposition from Democrats and educational advocacy collectives, clouding its fate.

This ongoing debate's resolution bears significant implications on the U.S. educational domain, possibly overhauling educational funding and access landscapes nationally.

Share this article...

Sign up for our newsletter.

Each month, we will send you a roundup of our latest blog content covering the tax and accounting tips & insights you need to know.

I confirm this is a service inquiry and not an advertising message or solicitation. By clicking “Submit”, I acknowledge and agree to the creation of an account and to the and .

We care about the protection of your data.

James T. Neilson We love to chat!
Please feel free to use our Ai chat assistant or use the contact button to contact us.
Please fill out the form and our team will get back to you shortly The form was sent successfully