What Homeschooling Families
Need to Know
The Federal Tax Credit
Scholarship Program is coming to Iowa!
Governor Kim Reynolds announced on January 5, 2026, that Iowa will participate in the new Federal Tax Credit Scholarship Program beginning in 2027.
This program, established through the One Big Beautiful Bill Act (Public Law 119-21), represents the nation's first federal K-12 scholarship tax credit and is expected to expand educational opportunities for Iowa families, including homeschoolers.
Homeschool Iowa has been actively involved in discussions about this program through our participation in the Iowa Alliance for Choice in Education, which is working directly with the Governor's office to answer key questions about implementation and eligibility.
What is the Federal Tax Credit
Scholarship Program?
This new federal program works through a unique mechanism that's different from traditional government funding:
How It Works:
Taxpayers donate to approved nonprofit Scholarship Granting Organizations (SGOs). SGO Donors receive a dollar-for-dollar federal tax credit up to $1,700. SGOs distribute the donations in the form of scholarships to eligible students. Families use the scholarship funds for qualifying educational expenses.
Key Features:
Maximum $1,700 tax credit per donor No cap on total program size or individual scholarship amounts Students from families at or below 300% of Area Median Income (AMI) eligible Scholarships cover a wide range of educational expenses Can be combined with existing Iowa programs like the tuition and textbook tax credit States voluntarily opt in, with governors certifying which SGOs can participate
Understanding the Funding
Understanding
the Funding Mechanism
The Federal Scholarship Tax Credit Program is not government-funded education like the Educational Savings Account (ESA) program. This is an important distinction for families concerned about government dependency and control.
Here's How It's Different:
Traditional ESA Program:
➜ Direct government appropriation from the state budget
➜ Tax dollars collected and redistributed by state agencies
➜ Government funds education directly
Federal Tax Credit Scholarship Program:
➜ Taxpayers voluntarily donate to 501(c)(3) nonprofit organizations
➜ Donors receive federal tax credit for their charitable contribution
➜ Private nonprofit SGOs distribute scholarships
➜ No different in structure than tax deductions for donations to churches, museums, or other charitable organizations
The Key Distinction:
The Federal Tax Credit Scholarship Program allows taxpayers to redirect a portion of their federal tax liability to support educational scholarships through private charitable organizations.
The government isn't appropriating new funds. Instead, it's allowing charitable giving that receives tax credit treatment.
What Expenses
Do Scholarships Cover?
Federal Tax Credit Scholarships can be used for expenses that qualify under federal Coverdell Education Savings Account rules, including:
Tuition and fees Academic tutoring Books, supplies, and equipment Technology and internet access Special needs services Transportation Uniforms Room and board (if applicable) Supplementary educational services
These expense categories align well with typical homeschool costs: curriculum, co-op fees, tutoring, online classes, educational supplies, and technology.
Why This Matters
Why This Matters
to Homeschoolers
Governor Reynolds specifically mentioned homeschooling in her announcement as one of the educational options families can choose in Iowa. The broad range of eligible expenses—including tutoring, curriculum materials, educational supplies, and technology—are expenses homeschool families routinely incur.
Iowa must now make implementation decisions about how the Federal Tax Credit Scholarship Program will work in our state, including questions about homeschool family eligibility and participation.
Iowa's Implementation Process
While the federal framework is established, Iowa has important decisions to make:
Which nonprofit SGOs will be certified to participate How homeschool families will access the program What definitions and eligibility criteria Iowa will use How the program interacts with Iowa's existing homeschool law (Chapter 299A)
The Iowa Alliance for Choice in Education, which includes Homeschool Iowa, is working directly with the Governor's office to help answer these questions and ensure implementation serves families well.
Homeschool Iowa's Priorities
As we engage in these discussions, our priorities remain clear:
Families who want to access scholarships should be able to do so. This program could help make homeschooling more affordable for families
Families who prefer to remain independent should face no new requirements. Participation must be completely voluntary with no penalty for choosing not to participate
Requirements for participants should align with Iowa's existing law. Chapter 299A already provides appropriate framework for home education
All of Iowa's homeschool options must be protected. Independent Private Instruction (IPI) and Competent Private Instruction (CPI) with No Reporting represent genuine freedom that must be preserved.
Simply put:
Participation in this program
should expand family choice
without compromising homeschool freedom.
What are the next steps?
What Happens Next?
Federal Tax Credit Scholarship Timeline:
2025-2026: Iowa develops SGO certification process and implementation guidelines 2027: Program launches; first scholarships become available
Opportunities for public input on Iowa's implementation rules will be available throughout this process.
Homeschool Iowa's Role:
We will continue participating in the Iowa Alliance for Choice in Education's work with the Governor's office. We're monitoring the implementation process and will keep members informed as details emerge. Your membership makes this advocacy possible.
What You Can Do
Stay informed: Watch for updates from Homeschool Iowa as implementation details are finalized.
Share your perspective: Would you be interested in accessing this program? What matters most to you about how Iowa implements it? Your input helps us represent homeschool families effectively in these discussions.
Support the work: Homeschool Iowa's seat at the table during these conversations is funded entirely by member contributions. Join Homeschool Iowa or renew your no longer active membership to ensure homeschool voices continue to be heard.
Ask questions: If you have questions about this program or how it might affect your family, reach out to us at [email protected].
This is a developing situation with many details still to be determined. Homeschool Iowa is actively engaged to ensure Iowa's implementation serves families well while protecting the homeschool freedom that makes Iowa a great place to educate at home.
