New Hampshire will participate in a first-of-its-kind federal tax credit program that helps fund private education.
The program allows residents to receive a tax credit of up to $1,700 for donations to organizations that administer scholarships to students for educational expenses. The money can be used to pay for student tuition, tutoring, and course materials.
Gov. Kelly Ayotte, who has advocated for expanded school choice, announced New Hampshire would participate on Thursday.
“We want every child across our state to be in the learning environment that best fits their needs, and this tax credit opportunity will help give families that choice and provide tax relief to individuals and businesses,” she said in a statement.
Passed by Congress last year as part of the One Big Beautiful Bill Act, the federal education tax credit requires states to opt in. So far, leaders in 21 other states have indicated they will do so, according to the legislative tracking website Ballotpedia.
The program creates a third avenue for New Hampshire families to receive funding for private school tuition and other educational expenses, joining the state’s education freedom account and state education tax credit scholarship programs, which rely on state funding and contributions from businesses, respectively.
Unlike those programs, funds contributed through the federal tax credit will be available to students who attend in-district public schools and private schools.
Interested families will apply directly to scholarship organizations for funding. There is no cap in the federal law for how much each child is eligible to receive.
The program will start in 2027.
Some have criticized the initiative because it will reduce the amount of money collected through the federal income tax, potentially leading to cuts to federal funding for public education.
“We have to look at all of the students and all of their needs,” Deb Howes, the president of New Hampshire’s chapter of the American Federation of Teachers, said during a hearing on a bill related to the program on Wednesday. “Not just: it would be nice to be able to do something extra and give families money to spend on whatever they would like to spend.”
Her union opposed New Hampshire’s participation in the program. A spokesperson for the state’s chapter of the National Education Association, the other union that represents public school educators in New Hampshire, declined to comment on Thursday.
Whether to opt in to the program has proven a political challenge for Democratic governors, who have historically opposed voucher-like programs. So far, the governors of Michigan, New Mexico and Oregon have said their states will not participate.
Meanwhile, Republican governors in states including Texas, Louisiana, and Virginia have indicated they will participate in the program.
The federal Department of Education has estimated that the program will generate $24 billion per year. No analysis has been released publicly as to how much New Hampshire scholarship organizations might receive.
Any family that earns 300% or less of the state’s median gross income will be eligible to apply for a scholarship.
Currently, New Hampshire has only one scholarship organization approved to receive and disseminate funds. The Children’s Scholarship Fund runs both the education freedom account program and state education tax credit program.
Kate Baker Demers, the executive director of the organization, said the federal program would fill an important niche for public school students.
“There’s many families that come to us who have economic challenges who may just need a tutoring scholarship or a technology scholarship, and right now we can’t help them at all,” she said. “But this would provide us the opportunity to have a different fundraising stream entirely and be able to provide a scholarship to a child in any school in New Hampshire.”