On June 18, 2026, Vermont Gov. Phil Scott (R) signed H.933, limiting the use of scholarship funds under the Education Freedom Tax Credit (EFTC) so they may benefit only public school students or students attending independent (or nonpublic) schools eligible to receive public funds, among other EFTC and unrelated tax policies. As of June 30, Scott had not indicated whether or not the state would participate in the program.
There are four types of independent, or nonpublic, schools in Vermont, only two of which are eligible to receive public funds — Approved Independent Schools and Therapeutic Approved Independent Schools. To be eligible for public funds, nonpublic schools must meet certain state standards. Under H.933, only Approved Independent Schools and Therapeutic Approved Independent Schools could participate in the EFTC.
H.933 also requires SGOs to award scholarships only for programs that are after school, during a school break, or for supplemental tutoring; for programs that are educational in nature; and for those that do not discriminate against any student because of race, color, religion, ancestry, national origin, sex, sexual orientation, gender identity, place of birth, crime victim status, or disability status.
Though the U.S. Department of the Treasury (Treasury) had not issued regulations to implement the program as of June 30, 2026, a June 10 preview of those regulations said states would likely not be authorized to issue standards for participating SGOs stricter than federally required. H.933's exclusion of two types of independent schools from participating in the EFTC could conflict with the federal regulations, which the Treasury said it expected to propose in September. The requirements for how scholarships must be used may similarly conflict.
The bill, among other administrative and tax provisions, enacted the following policies:
- The governor or their designee may opt into the EFTC annually, and may audit any scholarship-granting organization (SGO) either participating in the EFTC or seeking to.
- To participate in the program, SGOs' core mission must be to provide educational opportunities to those whom the bill called economically underprivileged students.
- Participating SGOs may provide scholarships only to students in a public school or nonpublic school eligible to receive public funds.
- When determining student scholarship awards, SGOs must not discriminate against any student because of their race, color, religion, ancestry, national origin, sex, sexual orientation, gender identity, place of birth, crime victim status, age, or disability status.
- SGOs must submit annual reports to the Vermont House and Senate Committees on Education regarding the number and amount of scholarships awarded, the number of donations received, their operating expenses, and other details about the SGO.
- The Vermont Attorney General must notify the Governor, the Vermont Speaker of the House , and the President Pro Tempore of the Senate if any provisions of H 0933 are rendered invalid by any federal act, federal agency rule, or court of competent jurisdiction. The state may not participate in the program until the Vermont Legislature has enacted legislation addressing the invalid H 0933 provision(s).
The Vermont House of Representatives passed the bill on March 27, and the Vermont Senate passed it on May 5. Ballotpedia was not able to identify a record of vote totals for the legislation.
About the program
The EFTC is a nonrefundable tax credit, allowing individuals to receive federal tax credits for donations up to $1,700 to authorized scholarship-granting organizations (SGOs). It is a dollar-for-dollar nonrefundable tax credit, meaning individuals can lower their federal tax liability by $1 for every $1 donated to accredited SGOs; if a taxpayer donates more than $1,700, they will not receive a tax refund for the amount over $1,700. The total amount of credits the program can offer is not capped.
SGOs distribute donated scholarship funds to eligible families for a variety of private or public educational expenses, including private school tuition, tutoring services, textbooks, and more. To qualify for scholarships, students had to live in households earning no more than 300% of the area's median gross income (AGMI) and be eligible to enroll in K-12 schools. EdChoice published an interactive U.S. map on May 21, 2026, displaying what 300% of AGMI would be for FY 2026 across the country. The program will take effect January 1, 2027.
States that elect to participate must submit a list of SGOs that taxpayers can donate to in order to receive the federal tax credit. Students in states that do not opt in cannot receive scholarships funded under the program, but donors in those states can still receive a federal tax credit by donating to SGOs in participating states. As enacted, the program will not affect state budgets.
Zooming out
Thirty-one (31) states have either opted in to the program or indicated that they plan to, as of June 30.
Colorado is the only state other than Vermont to consider legislation that would add requirements for SGOs. Colorado Democrats introduced a bill to add regulations for SGOs participating in the program after Colorado Gov. Jared Polis (D) opted the state into the program, but the bill died before advancing out of the chamber in which it was introduced.
Latest news
In addition to Vermont's legislation, here is the latest on the program:
- On June 18, Rhode Island Governor Dan McKee (D) signed H 7163 , which requires the Rhode Island General Assembly and the governor to approve any effort to opt into the Education Freedom Tax Credit (EFTC). It specified that the state may only participate if the legislature passes a bill that the governor signs, but does not indicate whether or not Rhode Island will participate in the EFTC.
- On June 10, the U.S. Treasury released a preview of the guidance that it said it would propose by the end of September. Read our coverage of the preview here .
- On June 3, the North Carolina General Assembly overrode Gov. Josh Stein's (D) veto of a bill requiring the state to opt in.
- On May 7, New York Gov. Kathy Hochul (D) said the state would participate in the program. She became the second Democratic governor to opt in behind Colorado Gov. Jared Polis .
Read Ballotpedia's coverage of the program here, and of state participation in it here.
