Keep Public Funds in Public Schools Act
- Bill Number
- S. 4297
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-04-15: Read twice and referred to the Committee on Finance.
- Last Updated
- 2026-06-30T21:58:55Z
AI-Generated Summary
Purpose
The "Keep Public Funds in Public Schools Act" aims to eliminate federal tax incentives for individual donations to scholarship granting organizations, which provide scholarships often used for private school tuition or other educational expenses outside public schools.
Key Provisions
- Repeal of Tax Credit: Removes Section 25F of the Internal Revenue Code, which previously allowed a non-refundable tax credit (up to a certain amount) for cash contributions to certified scholarship granting organizations.
- Repeal of Income Exclusion: Eliminates Section 139K, which excluded certain scholarship payments from recipients' gross income (meaning recipients no longer avoid taxes on these amounts).
- Conforming Amendments: Updates related sections of the tax code and table of contents to reflect the deletions.
- Effective Date: Applies to taxable years ending after December 31, 2026; income exclusion repeal applies to amounts received after that date.
Significant Changes to Existing Law
- Completely strikes out Sections 25F and 139K, ending the tax credit program introduced in prior legislation (likely referencing the 2017 Tax Cuts and Jobs Act expansions).
- Removes a mechanism that encouraged private donations for school choice programs by reducing donors' tax liability and exempting scholarship income.
Potential Impacts
- Taxpayers/Donors: Higher tax bills for those contributing to scholarship organizations, potentially reducing such donations.
- Scholarship Organizations and Recipients: Decreased funding and scholarship availability, affecting students using them for private, religious, or homeschooling options.
- Public Schools: Indirect boost via reduced diversion of potential funds, aligning with the bill's title emphasizing public school funding.
- Government Revenue: Likely increase in federal tax collections due to lost credits and inclusions in taxable income.
- No direct impact on international relations or most government agencies beyond the IRS.
Main Stakeholders Affected
- Individual Donors: Primarily higher-income taxpayers who previously claimed the credit.
- Scholarship Granting Organizations: Non-profits administering scholarships, facing funding shortfalls.
- Scholarship Recipients: Families/students relying on these for non-public education options.
- Public Schools and Educators: Potential beneficiaries through preserved public funding priorities.
- IRS and Treasury Department: Administrative simplification from repealed provisions.
- Lawmakers and Advocacy Groups: Divided along lines of school choice vs. public education funding debates.
Notable Legal, Constitutional, or Political Implications
- Legal: Straightforward tax code amendment; no challenges to IRS authority anticipated.
- Constitutional: Neutral; does not infringe on free speech, religion, or equal protection, though it ends indirect support for private/religious schools via tax policy.
- Political: Fuels ongoing debates on school vouchers and choice programs; sponsored by a large bipartisan group of Senate Democrats, signaling partisan divide on education funding. May influence future tax and education policy.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (33)
Sen. Hirono, Mazie K. [D-HI], Sen. Sanders, Bernard [I-VT], Sen. Reed, Jack [D-RI], Sen. Luján, Ben Ray [D-NM], Sen. Duckworth, Tammy [D-IL], Sen. Van Hollen, Chris [D-MD], Sen. Schiff, Adam B. [D-CA], Sen. Murphy, Christopher [D-CT], Sen. Warren, Elizabeth [D-MA], Sen. Smith, Tina [D-MN], Sen. Blumenthal, Richard [D-CT], Sen. Merkley, Jeff [D-OR], Sen. Coons, Christopher A. [D-DE], Sen. Shaheen, Jeanne [D-NH], Sen. Markey, Edward J. [D-MA], Sen. Welch, Peter [D-VT], Sen. Blunt Rochester, Lisa [D-DE], Sen. King, Angus S., Jr. [I-ME], Sen. Wyden, Ron [D-OR], Sen. Fetterman, John [D-PA], Sen. Schumer, Charles E. [D-NY], Sen. Kim, Andy [D-NJ], Sen. Bennet, Michael F. [D-CO], Sen. Gillibrand, Kirsten E. [D-NY], Sen. Kaine, Tim [D-VA], Sen. Durbin, Richard J. [D-IL], Sen. Heinrich, Martin [D-NM], Sen. Padilla, Alex [D-CA], Sen. Booker, Cory A. [D-NJ], Sen. Gallego, Ruben [D-AZ], Sen. Hickenlooper, John W. [D-CO], Sen. Whitehouse, Sheldon [D-RI], Sen. Schatz, Brian [D-HI]
Recent Actions
- 2026-04-15: Read twice and referred to the Committee on Finance.
- 2026-04-15: Introduced in Senate
Bill Versions
- Keep Public Funds in Public Schools Act — issued 2026-04-15 — PDF (3 pages)