Trump Tax Plan: Homeschool Tax Credit

Signed into law by President Trump on July 4, 2025, the One Big Beautiful Bill Act introduced broad changes to federal education tax policy, including provisions that may benefit homeschooling families. While the legislation does not create a direct federal tax credit specifically for homeschooling, it expands several financial mechanisms that families can use to support education-related expenses, such as scholarship donation credits and more flexible 529 plan rules.

A financial advisor can help families evaluate how these changes affect their tax strategy or long-term education savings goals. Connect with an advisor for free.

Trump Tax Plan: Potential Tax Benefits for Homeschooling

Although the legislation stops short of establishing a federal tax credit for homeschooling itself, it includes two notable provisions that may provide indirect financial support. These measures expand access to education funding and broaden the permitted uses of existing tax-advantaged accounts. 

Tax Credit for Donations to Scholarship-Granting Organizations

One of the most notable education-related provisions establishes a new federal tax credit for contributions to certified scholarship-granting organizations.

Under Section 25F, taxpayers may claim a dollar-for-dollar credit, up to an annual limit, for donations that support K–12 education scholarships. The credit is capped at $1,700 per tax year and is not adjusted for inflation.

These scholarships can be used by families, including those who homeschool, to pay for qualified educational expenses, such as: 

• Tuition and fees
• Curriculum and instructional materials
• Books and educational content
• Online courses
• Tutoring services from qualified professionals
• Standardized test fees
• Dual enrollment classes
• Educational therapies, such as speech and occupational therapy

How Does It Compare With the Previous Law?

Previously, federal tax law did not offer a comparable credit for donations to scholarship-granting organizations. Incentives tied to education donations or school choice programs were largely limited to the state level.

Although some states continue to provide credits or deductions for contributions supporting education initiatives, federal law historically lacked a similar option that could indirectly help offset homeschooling or other K–12 education expenses. This new provision introduces a federal mechanism for supporting K–12 education costs through third-party scholarship programs.

Check out our in-depth study to learn more about how the the One Big Beautiful Bill Act (OBBBA) impacts Americans across the country.

Using 529 Education Savings Accounts for Homeschooling Expenses

The bill also expands what constitutes a “qualified education expense” under Section 529 education savings plans. These plans have traditionally been used for postsecondary education and, more recently, limited K–12 tuition expenses. The legislation significantly broadens their scope.

According to Section 70413 ¹ of the bill, families will be allowed to use 529 funds, without incurring taxes or penalties, for a wide variety of K–12 costs, including:

• Curriculum and materials
• Online educational programs
• Tutoring by credentialed professionals
• Standardized test fees
• Costs of dual enrollment college courses
• Educational therapies

Furthermore, in 2026, the law allows up to $20,000 in annual withdrawals from 529 accounts for qualified K-12 education expenses (up from $10,000 in 2025).

How Does It Compare With the Previous Law?

Under prior rules, 529 plans could be used for up to $10,000 per year in K–12 tuition expenses. ² But most homeschooling-related costs such as curriculum materials, tutoring services or therapeutic support were not considered qualified expenses by the IRS. As a result, families who used 529 funds for those purposes risked owing income taxes and penalties on the withdrawals.

The updated rules mark the first time federal law recognizes a broader range of homeschooling expenses as eligible uses of 529 funds. This expansion increases flexibility for families who homeschool and reduces the likelihood of unexpected tax consequences when using education savings for those costs.

How OBBBA Could Impact Public Schools

The One Big Beautiful Bill Act contains several tax and education-related provisions that could affect public school funding over time. By broadening education-related tax benefits that apply beyond traditional public school settings, the legislation may redirect some financial support toward families choosing private or home-based education. If widely used, these incentives could change the financial dynamics associated with public education.

Because public schools rely heavily on federal and state funding formulas tied to student enrollment, a shift toward alternative education options could have downstream effects. Declining enrollment may lead to lower per-student funding, potentially creating budget pressures and forcing difficult decisions around staffing, programs or services.

Supporters argue that expanded school choice and increased competition could prompt public schools to adapt and improve.

Ultimately, the magnitude of any impact will depend on how extensively families use the new provisions and how state and local policymakers respond to evolving funding challenges.

Bottom Line 

Although the new legislation does not offer a stand-alone federal tax credit for homeschooling families, it introduces two major enhancements: a new credit for donations to scholarship-granting organizations and expanded access to 529 education savings accounts for homeschool-related expenses. These changes align with Trump’s ongoing push for school choice, reflecting both past campaign promises and executive actions. As tax policy continues to evolve, a financial advisor can help families take full advantage of any available tax benefits for education.

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