Congress moves to defund private scholarships, redirect tax breaks to public schools
H.R. 9289 — Keep Public Funds in Public Schools Act of 2026 · Filed by Gwen Moore (D-WI) · 103 cosponsors · Introduced Jun 11, 2026 · Referred to committee
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What it does
This bill repeals two federal tax provisions that currently allow individuals to reduce their taxes by contributing to scholarship granting organizations (SGOs). It eliminates a tax credit (section 25F) that directly reduced taxes dollar-for-dollar for such contributions, and removes an exclusion (section 139K) that allowed scholarship recipients to exclude those funds from taxable income. The bill takes effect for tax years ending after December 31, 2026.
Why we flagged it
The bill is a straightforward repeal of two tax provisions that subsidized private scholarship funding. It is not a new program or restriction but a removal of existing tax preferences, making it fundamentally a tax-policy amendment with redistributive intent.
What the text implies
- Repealing section 139K may create tax liability for scholarship recipients who received SGO funds in prior years if the exclusion is interpreted retroactively or if recipients face amended return obligations.
- The bill does not appropriate recaptured tax revenue to public schools, so the fiscal benefit to public education is contingent on separate appropriations legislation.
The full analysis lists 4 implications of this text.
Who stands to gain
U.S. Treasury (increased tax revenue from eliminated credits and exclusions); Public school systems (if recaptured revenue is appropriated to them)