A federal tax-credit scholarship program beginning Jan. 1 allows taxpayers in Ohio and 29 other states that opted in to redirect part of their federal income tax liability to nonprofit scholarship-granting organizations. The Education Freedom Tax Credit was created by a tax code overhaul and works as a dollar-for-dollar credit. Individuals may claim up to $1,700, and couples filing jointly up to $3,400. It is non-refundable, so donations can reduce taxes owed to zero but cannot generate a refund. Ohio has opted in; donations made in 2027 would offset taxes owed for 2028.
Cleveland Metropolitan School District is reviewing whether it can benefit. Board Chair Sara Elaqad said via email that CMSD is looking into how the credit might help its students. School finance expert Marguerite Roza said districts should act quickly because taxpayers must learn the option exists, and she recommended briefing parent groups, staff and board members. She estimated a district like Cleveland could raise roughly $200 per student by starting with its own employees.
Participating nonprofits must be IRS-recognized, verified by their state and spend at least 90% of revenue on scholarships. Students may apply if their family earns under 300% of area median income, which in Cuyahoga County is about $315,000 for a family of four. Public districts cannot spend the money on instruction or basic materials, but it could cover field trips, extracurriculars, tutoring and fee-based activities.
Critics, including Piet van Lier of Honesty for Ohio Education, said private schools already have the needed infrastructure. He and Partnership Schools' Beth Blaufuss raised concerns that the program's projected $26 billion to $51 billion annual cost could lead to cuts in Title I and IDEA funding.