What MS Parents Should Know About School Choice Provisions In the Big Beautiful Bill

The “One Big Beautiful Bill Act” was signed into law by President Trump on July 4. Included in that massive bill was a new school choice provision that can benefit almost all children in Mississippi.  

There are two parts to the new program: (1) a tax credit for contributions to organizations that provide scholarships to students in public or private K-12 schools, and (2) rules that those organizations have to follow in granting scholarships (including eligibility of scholarship students). 

Tax Credit for Contributions 

  • Starting in 2027, any individual taxpayer, whether they have school-age kids or not, will be able to claim a tax credit (not simply a deduction) of up to $1,700 per year for contributions to scholarship-granting organizations (SGOs). That means if you give an SGO a total of $1,700 (or less) in a year, you can reduce what you owe the IRS by the amount you give. We aren’t just talking about reducing the amount you might write a check for on April 15; we mean the total amount of income tax you owe for the year! So, almost all federal taxpayers would qualify for the full amount of the tax credit. This is different from a tax deduction, which only reduces the amount of income on which you pay taxes. A tax credit is a dollar-for-dollar reduction in what you pay to the IRS. And because it’s not a deduction, you’ll be able to claim the credit whether you itemize your deductions or not 

Rules for Scholarship-Granting Organizations (SGOs) and for Which Students Can Receive a Scholarship 

  • Contributions described above can only be used by SGOs to provide scholarships to students in the state where the SGO is located. That means a scholarship must come from a Mississippi SGO.
  • The vast majority of students in Mississippi will be eligible to receive a scholarship under this law. Students who live in a household with income up to the amounts below would be eligible in Mississippi (these amounts change every year based on inflation):
    • 2-Person Household: $ 187,218
    • 3-Person Household: $ 229,911
    • 4-Person Household: $ 259,557
  • Eligible expenses are tuition, books, special needs services, necessary tech equipment, etc. There is no limit specified in the law for the dollar amount of a scholarship. Any such limits will be up to each SGO. 
  • In addition to the requirements described above, here are some of the things SGOs must be or do:
    • be a 501(c)(3) tax-exempt organizations, meaning no for-profit organizations may participate
    • provide at least 10 scholarships to students who do not all attend the same school
    • spend at least 90% of the org’s income on scholarships; 
    • keep separate accounts for tax credit contributions, which are subject to the limitations of this act, and other contributions, which are not. 
    • NOT earmark any contributions for scholarships for any particular student or grant a scholarship to children of major donors to the SGO.
  • States must opt in (“elect”) to participate. The OBBB anticipates the governor of a state will make that election, but it allows someone else to be designated in state law to make that election.  

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