A federal tax credit for donations to scholarship-granting charities, enacted July 4, 2025, takes effect Jan. 1 and could broaden access to K–12 scholarships, including for families considering Catholic schools.

The credit can reduce federal income taxes dollar for dollar, up to $1,700 for individuals and $3,400 for married couples filing jointly; donors can direct contributions to a school or diocese, but not to a specific child, and funds must support scholarships.

The program’s impact will depend on how much scholarship-granting organizations raise and how they distribute aid, since small awards may fall short of tuition for low-income families even as partial assistance helps some modest-income households.

Shawn Peterson of Catholic Education Partners said enrollment effects will take time, while a national program could eventually generate billions of dollars; the American Catholic Education Fund is partnering with dioceses in Texas, Missouri, South Dakota, South Carolina and Alaska.

New York opted into the program on Oct. 9, potentially opening access to the credit for more than 2.7 million public, parochial and private school students; Catholic school leaders hope it can help families afford tuition as the Archdiocese of New York reports school closures and campus consolidations in 2025–26.

The initiative arrives as Catholic school enrollment has declined from about 5.6 million students in 1964–65 to fewer than 1.7 million today.