What the New Federal K-12 Tax Credit Program Could Mean for Missouri
One of the most notable policies in the One Big Beautiful Bill (OBBB) is the establishment of the first-ever federal K-12 tax credit program, which could strengthen educational choice in Missouri and states across the nation. This new program allows taxpayers to donate to a scholarship-granting organization (SGO) that will distribute funds to families, who in turn can use them for private school tuition, special needs services, textbooks, tutoring, and more.
This is not a new concept for Missourians familiar with our similar state-level program, MOScholars.
How the Program Works
Each taxpayer can direct up to $1,700 of their federal tax liability to an SGO in any state rather than sending it to the IRS. While donor contributions are capped, there is no federal limit on the amount an eligible student may receive, or how many students are funded. SGOs determine funding allocation based on pre-set rules (evenly, tiered by income, etc.).
Participating SGOs must be federally recognized, legitimate nonprofits (not private foundations), and the governor or another state authority must approve the list of eligible SGOs. In Missouri, the State Treasurer’s Office approves organizations for MOScholars, so it may also have this role for the federal program as well.
State Participation
The federal program requires states to opt in to this new program. I expect Missouri will, but we have not declared our intent to participate at this point. The tax credit is slated to become available beginning in 2027.
If Missouri opts out, Missouri SGOs would not be eligible to receive or distribute federal funds. This means no Missouri students could benefit from the program. However, Missouri residents could still claim the federal credit by donating to an SGO in another participating state.
Participating in this program would complement MOScholars and bring even greater choice, flexibility, and opportunity to families around the state.
