Parents who want greater control over their children’s education should pay close attention to the new Federal Scholarship Tax Credit, which launches Jan. 1. FSTC will make it much easier for low-income and middle-class families to access private or parochial schools, letting parents choose the education setting that best meets their child’s needs. Parents who want to remain in public schools could use FSTC to pay for expenses like tutoring, aftercare, SAT prep classes, etc.

The FSTC was created by the One Big Beautiful Bill Act and is unlike anything else in the federal tax code, as the scholarship money is basically free federal money to parents and states like Louisiana that elected to participate in the FSTC.

There are two aspects to the FSTC: (1) a tax credit for taxpayer contributions to scholarship-granting organizations that provide scholarships to eligible K-12 students and (2) rules those SGOs must follow in granting scholarships, including income limits.

For a simplified example of the just-issued 180-page proposed regulations: If a married filing jointly taxpayer checks a box electing a $3,400 maximum contribution to the FSTC, they get a federal tax credit that will reduce their tax liability by $3,400, and the taxpayer will then send a $3,400 check to the qualified Louisiana SGO instead of the IRS. The maximum for single taxpayers is $1,700.

The FSTC money coming to Louisiana could be huge. Assuming all 2.1 million Louisiana taxpayers checked the box, the theoretical maximum is projected to be $4.8 billion/year. If only 10% of Louisiana taxpayers checked the box, that is still $480 million a year, which could easily pay for the 39,000 Louisiana families who applied for LA GATOR at an estimated cost of $351 million a year.

FSTC is an education game-changer.

STEVE GARDES

Lafayette