The Federal Scholarship Tax Credit: Why We Joined the Washington Student Success Coalition

Nava Carlyle  |  June 11, 2026

We have joined the Washington Student Success Coalition. Our Policy Council voted June 10 to add the Chamber's name to a statewide effort preparing Washington for the Federal Scholarship Tax Credit, a new federal program that could direct an estimated $732 million a year towards a range of educational expenses - including tutoring, learning therapies, supplies and technology, and classroom resources for Washington students. Whether any of it reaches our state comes down to a single decision in Olympia.

How the Program Works

The Federal Scholarship Tax Credit was created in the federal budget reconciliation bill signed into law on July 4, 2025, and takes effect January 1, 2027. Starting that day, any taxpayer can redirect up to $1,700 of their federal tax liability to a qualified nonprofit Scholarship Granting Organization and receive a dollar-for-dollar credit in return. Those organizations then award the funds to eligible K-12 students and families for a variety of expenses such as tutoring, learning therapies, technology, school supplies, tuition, transportation, musical instruments, test preparation, and other learning enrichment.

The program is means-tested and accountable by design. Scholarships are restricted to students from households earning at or below 300 percent of area median income, and Scholarship Granting Organizations must pass annual financial audits, report expenditures publicly, verify family income, and spend at least 90 percent of funds directly on student scholarships.

Washington Has to Opt In

None of this happens automatically. Each state must elect to participate and submit a list of qualified Scholarship Granting Organizations to the IRS. As of June, 30 states including New York have indicated plans to participate and Washington is not yet among them. In January, state legislators introduced House Joint Memorial 4013 calling on Governor Bob Ferguson to elect Washington's participation and submit the required list of Scholarship Granting Organizations.

The unusual part of this decision is that Washington taxpayers can claim the credit either way. If our state stays out, donors here can still direct their $1,700 to organizations in participating states, meaning those education dollars would flow exclusively to students in participating states. Crucially, opting in requires no state expenditure and creates no obligation on the state budget.

Why We Joined

With 90 percent of Washington students enrolled in public schools, public school students stand to benefit most, and the eligible expenses cover the kinds of programs our communities currently fund through levies. If 6,000 Bellevue schools alumni families directed their credits to the Bellevue Schools Foundation, that is $10 million a year in new support for local students.

"We spend so much time advocating for things that just make fiscal sense. This just makes sense." — Jill Jackson, Monument Advocacy

The Washington Student Success Coalition launches in July, and its members are working to build public awareness, educate community stakeholders, and prepare schools and nonprofit organizations for implementation. That last piece is the practical hinge: Scholarship Granting Organizations administer the program, and building their capacity to manage donations, distribute scholarships, and serve students will determine how much of the opportunity Washington actually captures.

"New educational resources can create meaningful opportunities for students, but successful implementation requires planning, strong nonprofit infrastructure, and collaboration among educators, families, community organizations, and policymakers." — Quentin Orem, Executive Director, Ferry Foundation

The coalition's shared goal matches ours: advocate for Washington's participation while ensuring any implementation is transparent, effective, and focused on helping students access the resources they need. We look forward to working alongside educators, nonprofit leaders, and policymakers as the July launch approaches, and we will keep members posted as the state's decision nears.