Minnesota should opt into the Federal Scholarship Tax Credit

Imagine a federal government program that could generate hundreds of millions of dollars in scholarships for educational achievement each year and does not cost the state one penny.

Well, it’s real, and it’s time to urge legislators and Gov. Tim Walz to make this opportunity a reality for Minnesota’s kids and their future.

Congress recently passed the first ever Federal Scholarship Tax Credit, which will provide millions of dollars for students across the United States by stimulating donations to scholarship granting organizations (SGOs). But for Minnesota students to benefit, the state needs to opt into the program by Jan. 1, 2027.  Walz can opt in unilaterally or the Legislature can direct the executive branch to do so by passing a bill that the governor must sign.

The Minnesota Catholic Conference (MCC) urges Walz and the Legislature to join the growing list of states taking advantage of this opportunity. Not doing so puts politics ahead of people and allows millions in charitable contributions to leave our state.

How it works and why Minnesota should opt in

The Federal Scholarship Tax Credit program enables individual taxpayers to receive a dollar-for-dollar tax credit against their federal tax liability for donations (up to $1,700 per year) made to K-12 SGOs. These organizations must use authorized donations to provide scholarships for tuition, tutoring, special needs, supplies/technology and other education expenses. Students in public and private schools, as well as homeschoolers, could be eligible for scholarships.

Opting into the tax credit would not cost our state anything because it is a federal tax credit. A state’s only obligation is to decide to opt in and submit the list of eligible scholarship organizations by Jan. 1, 2027, and by Jan. 1 of each subsequent year.

Keeps dollars in state

Failure to opt in leaves Minnesota kids behind. It will cause local dollars to leave our state through donations made by Minnesota taxpayers to SGOs in opt-in states where they are eligible for the tax credit. This will cause our state’s kids to lose out on scholarship opportunities for their educational achievement. We should keep these scholarship dollars here for our kids.

This program will help public and private school students. Local nonprofit SGOs and public-school foundations can receive donations to fund tuition, tutors and other supplemental learning opportunities, potentially generating hundreds of millions of dollars to strengthen educational achievement. By one estimate, even 30 percent of eligible filers taking advantage of the credit could generate almost $500 million in scholarships. In a state with plummeting test scores and rising achievement gaps, it should be unimaginable that Minnesota would not opt in.

Tell Walz to opt into the Federal Scholarship Tax Credit. Thousands of Minnesotans have already made their voices heard. You can use the Catholic Advocacy Network to contact the governor and legislators, urging them to opt Minnesota into this exciting opportunity to change the educational trajectory of so many students. Learn more and take action at mncatholic.org/federalscholarshiptaxcredit.