Over the past year, one of the most common questions surrounding the new Federal Tax Credit Scholarship (FTCS) program has been straightforward: who will benefit from it?
Critics often assume the program will primarily serve nonpublic school students. Supporters argue it will create new educational opportunities for families across all sectors of education. With the program set to launch in 2027, policymakers, educators, and taxpayers are increasingly asking how scholarship dollars are likely to be distributed and what the impact could be on public schools.
A new Teach Coalition white paper examines one of the best real-world examples available: Arizona’s long-running tax credit programs.
The findings suggest that public school students would be the largest beneficiaries of the new federal scholarship program.
Arizona provides a useful model for the federal program
For nearly three decades, Arizona taxpayers have been able to direct tax-credit-eligible donations either to public schools or to scholarship organizations serving nonpublic school students.
Because donors have a choice between supporting public school educational programs and scholarship organizations, Arizona offers one of the closest existing comparisons to the new Federal Tax Credit Scholarship program.
What We Found
The majority of Arizona donors choose public schools
In 2024:
• 188,787 taxpayers contributed through Arizona’s Public School Tax Credit program.
• 75,722 taxpayers contributed to School Tuition Organizations serving nonpublic school students.
That means approximately 2.5 taxpayers donated to public schools for every one taxpayer who donated to a nonpublic school scholarship organization.
In total, about 70 percent of participating donors chose public school programs.
Windfall of billions could flow to public school students
Education Reform Now estimates that the Federal Tax Credit Scholarship program could generate more than $12 billion annually in charitable contributions nationwide.
If donor behavior mirrors Arizona’s experience, approximately $8.6 billion of those funds would ultimately support public school students.
A New Opportunity for Students
The debate over the FTCS program should not be framed as public schools versus nonpublic schools. Rather, the evidence suggests it has the potential to create new educational resources and opportunities for students across all sectors of education.
As the Federal Tax Credit Scholarship program moves toward implementation, discussions about its impact should be grounded in evidence.
Read the full case study here.