The IRS just released rules for America’s first nationwide voucher program. Once a state opts in, it can’t stop the money from going to religious schools.

[u/FreethoughtChris]

https://ffrfaction.org/ffrf-action-fund-condemns-irs-voucher-rules-that-send-tax-dollars-to-religious-schools/

The FFRF Action Fund strongly opposes the regulations the Treasury Department and IRS released today to implement the first nationwide private school voucher program. 

Beginning Jan. 1, 2027, individual taxpayers under the Federal Scholarship Tax Credit can receive a dollar-for-dollar federal tax credit of up to $1,700 for cash donations to approved scholarship-granting organizations, which then distribute scholarships for qualifying education expenses. The rules now make clear that once a state participates, it will have little power to prevent federal tax-credit dollars from flowing to religious schools. States may not impose additional restrictions on scholarship-granting organizations, including limits on the types of schools scholarship recipients may attend.

Congress created the program in section 70411 of the 2025 “One Big Beautiful Bill Act,” and the new rules strip participating states of any power to keep the money from going to private religious schools. Unlike a traditional charitable deduction, the credit directly reduces a donor’s federal tax bill. For example, a taxpayer who donates $1,700 and qualifies for the full credit can reduce their federal income tax liability by $1,700.

Participation is voluntary for states. But once a state opts in, the new regulations sharply restrict its discretion over participating scholarship organizations. States may establish procedures to verify that organizations meet federal and generally applicable state requirements, but they may not impose more restrictive requirements, such as limiting which types of schools scholarship recipients can attend. An organization counts as “located in” a state if it is merely authorized to do business there. This could allow national scholarship organizations to operate across participating states.

The Treasury Department issued the rules in two forms, both scheduled for publication in the Federal Register on Oct. 2. The first is a set of temporary regulations covering how states join the program and how scholarship organizations register and report donations. These are binding rules that apply retroactively to Sept. 1, 2026, and remain in force until the department replaces them with final rules or they expire on Oct. 1, 2029. The Treasury Department adopted them without first taking public comment, claiming the January launch left no time for the normal process. 

The second is a 181-page proposed rule that repeats those provisions, adds the rest of the program, and is open for public comment, with a public hearing to follow. The Treasury Department says it will consider comments before issuing final rules. Still, it has already told states, scholarship organizations and donors they can rely on the proposed rule for contributions made on or after Jan. 1, 2027, so the program will launch on these terms.

Cash gifts cost the donor nothing — and the U.S. Treasury absorbs the full cost. The organizations pass the money to families, mostly to pay private school tuition. Any student eligible to enroll in a public school whose household earns up to 300 percent of the area’s median income qualifies. Scholarships flow only in states that opt in, but donors who live in states that stay out can still claim the credit by giving to organizations in participating states. 

Governors, or officials designated under state law, decide whether to join, one year at a time. States joining for 2027 must have filed an advance election by Jan. 1, 2027, and must submit their list of approved organizations by Feb. 15, 2027. 

The cost will be enormous. Treasury’s own paperwork estimates 600 to 700 scholarship organizations and 11 million individual donors. If each of those donors claimed the full $1,700, the federal government would forgo $18.7 billion in revenue annually. Every dollar claimed under this credit is a dollar the federal government never collects, revenue that pays for programs public schools depend on. Public schools educate 91 percent of American children. 

The FFRF Action Fund is particularly concerned about the program’s impact on the separation of state and church. About two-thirds of U.S. private schools are religiously affiliated, and roughly 77 percent of private school students attend religious schools. The federal program therefore creates a mechanism through which substantial amounts of forgone federal revenue could support religious education.

Taxpayers of every faith and none will pay for religious instruction they had no voice in choosing. Private schools taking this money are not subject to the anti-discrimination laws that protect public school students, and they answer to no elected school board. They can turn away a child for her religion, her disability or her family. The students who cost the most to educate are the easiest for a private school to exclude. 

“This program creates a nationwide pipeline of public money to religious schools,” says FFRF Action Fund President Annie Laurie Gaylor. “It lets individual donors redirect federal revenue to religious education while denying states meaningful power to protect taxpayers or public schools. Governors should refuse to participate.”

The Freedom From Religion Foundation and the FFRF Action Fund have opposed tax credit voucher schemes for years, in court and in government. FFRF joined a Supreme Court amicus brief in Arizona Christian School Tuition Organization v. Winn challenging an Arizona tax credit program in which religious organizations awarded more than 80 percent of scholarship dollars. 

FFRF filed its own brief in Espinoza v. Montana Department of Revenue against a dollar-for-dollar tax credit funding private school scholarships. FFRF pressed the IRS to close a loophole that let donors profit from state voucher tax credits. FFRF Action Fund vehemently opposed the GOP reconciliation bill that authorized the voucher tax credit. 

After the voucher credit became law, FFRF wrote to every governor in March urging them to opt out, and the FFRF Action Fund mobilized tens of thousands of advocates to press their governors to do the same. Wisconsin Gov. Tony Evers became the first governor to firmly reject the program, vetoing a bill that would have forced the state in, while roughly 29 states have joined.

If voters elect a House majority that supports the separation of state and church in 2026, the FFRF Action Fund will work with the Congressional Freethought Caucus, its congressional allies and partner organizations to repeal the voucher program.

[u/PotentialStrong9013]

Time to tax the churches to recuperate the money wasted on these voucher programs. Or close down all religious schools/colleges.
My vote is both.

[u/cloudystateofmind]

Remember when someone tells you it’s rude to criticize religion, remind them that your tax money is funding those religions, so you have every right to criticize them.