93% of NC students qualify for federal school-choice tax credit

A new national analysis estimates that nearly 1.7 million NC children meet the income and enrollment criteria to receive scholarships under the federal Education Freedom Tax Credit, which takes effect in 2027.

Image of school choice towels courtesy of School Choice Week.

Nearly 1.7 million North Carolina children, or about 93% of the state’s K-12 population, would qualify for scholarships under the new federal school choice tax credit, according to a national analysis released this week by the school choice advocacy organization the American Federation for Children (AFC).

The report, by AFC senior fellow Patrick Graff, offers the first state-by-state estimates of eligibility under the Education Freedom Tax Credit (EFTC), the federal program created by the One Big Beautiful Bill Act that President Donald Trump signed in July 2025.

Nationally, Graff estimates 51.7 million children — around 92% of students eligible to enroll in a K-12 school — meet the program’s criteria.

Graff’s estimate also counts home-schooled students, of whom North Carolina has roughly 153,000, according to the state Division of Non-Public Education. The report places North Carolina among 22 states where it concludes state law treats home schools as private or religious schools, but cautions that final rules from the US Treasury Department could resolve the question differently.

North Carolina’s estimated 1.7 million eligible children rank ninth among the states. The Tar Heel State’s 93% eligibility rate sits a point above the national figure. Six of the 10 states with the largest eligible populations — Texas, Florida, New York, Ohio, Georgia, and North Carolina — have opted into the program. California, Illinois, Pennsylvania, and Michigan have not.

North Carolina joined the program in June, when the state Senate completed a veto override of House Bill 87 over Gov. Josh Stein’s objections. Donations become creditable in January 2027.

“For governors and states who have taken swift action to opt in, thank you, and for governors still considering opting in, what are you waiting for?” said Tommy Schultz, AFC’s CEO, in a statement. “Children and families in your states, by the millions, are waiting for the educational resources that will support them through the tax credit.”

The new program will begin in 2027, when individuals can claim a dollar-for-dollar federal tax credit of up to $1,700 a year for donations to Scholarship Granting Organizations (SGOs). Those organizations can then issue scholarships for tuition, tutoring, dual enrollment, special-education therapies, transportation, curriculum materials, testing fees, and other qualified educational expenses.

Under the statute, a student must be eligible to enroll in a public elementary or secondary school and live in a household earning no more than 300% of the area’s median gross income, as published by the US Department of Housing and Urban Development and adjusted for household size.

Because that ceiling is pegged to local income rather than set as a single national figure, the limits vary widely across North Carolina. Using HUD’s fiscal 2026 income limits, a family of four in Wake County could earn up to roughly $396,900 and still qualify. In Mecklenburg County, the figure is about $352,200. In Graham County, in the far western mountains, it is roughly $202,200, while in Robeson County, one of the state’s poorest, it is about $177,900.

Graff describes the breadth as intentional. “Eligibility this broad is a design feature of the statute,” he writes, noting that the eligible share exceeds 85% in every state.

The report is explicit that its estimates describe who could receive a scholarship, not who will. “Eligibility is not participation,” it states. The actual number will depend on how many donors contribute and how many scholarship organizations set up in the state.

HB 87 directed the State Education Assistance Authority (SEAA) to establish rules by July 1, 2026, or within 120 days of federal guidance, whichever is later. US Treasury has previewed its guidance but not issued the final version yet. The SEAA already administers the state’s Opportunity Scholarship Program and will maintain North Carolina’s list of approved scholarship organizations for submission to the US Treasury.

As of July, according to the report, 31 states had opted in or announced plans to do so, home to 30.9 million eligible children. Another 20.8 million live in the 19 states and the District of Columbia that have not.

“93% of NC students qualify for federal school-choice tax credit” was originally published on www.carolinajournal.com.