Trump Tax Plan: Homeschool Tax Credit

Signed into law by President Trump on July 4, 2025, the One Big Beautiful Bill Act introduces sweeping changes to federal education tax policy, including provisions that could benefit homeschooling families. While the legislation stops short of offering a direct tax credit for homeschooling, it expands financial tools available to families, such as new scholarship donation credits and more flexible 529 plan options.

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.

Key Takeaways

• The Trump tax law, known as the One Big Beautiful Bill Act (OBBBA), introduces a federal tax credit for donations to scholarship-granting organizations, which can fund homeschooling expenses.
• It expands 529 plan rules to allow tax-free use of funds for a wide range of homeschool-related costs, such as curriculum and tutoring.
• The bill includes provisions that align with previous proposals focused on school choice and parental discretion in education spending.

Trump Tax Plan: Potential Tax Benefits for Homeschooling

While the legislation does not establish a direct federal tax credit for families who homeschool, it introduces two significant provisions that could provide indirect financial support. These provisions broaden access to educational funding and expand allowable uses of existing tax-advantaged accounts. 

Tax Credit for Donations to Scholarship-Granting Organizations

A key element of the tax plan is the introduction of a federal tax credit for individuals who donate to certified scholarship-granting organizations. Section 25F of the bill¹ allows taxpayers to claim a dollar-for-dollar credit, up to a specified cap, for contributions that fund K–12 education scholarships. The maximum credit is $1,700 per tax year.

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?

Under previous federal law, there was no provision for a federal tax credit for contributions to scholarship-granting organizations. Such credits were generally available only at the state level.

Furthermore, while some states offered tax incentives for donations to school choice programs, federal tax law did not provide a parallel mechanism that directly or indirectly benefits homeschooling families. This credit represents a new federal avenue for funding homeschool expenses through third-party scholarships.

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 70413² 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, the law allows up to $20,000 in annual contributions to 529 accounts, starting in 2026.

How Does It Compare With the Previous Law?

Previously, 529 accounts could be used for up to $10,000 per year in K–12 tuition expenses.³ However, the IRS does not currently recognize most homeschooling-related costs, such as curriculum materials, tutoring, or therapies, as qualified expenses. This means families using 529 funds for those purposes could have faced taxes and penalties. 

The change will, for the first time at the federal level, treat a wide range of homeschool-related expenditures as qualified uses of 529 funds. That offers more flexibility and financial relief for homeschool families.

How OBBBA Could Impact Public Schools

OBBBA introduces several tax and education provisions that could affect public school funding. The legislation could shift some education-related tax benefits away from traditional public school systems and toward families pursuing private or home-based learning. This reallocation may reduce the relative financial advantage of public education, especially if a large number of families choose to claim the credit.

Public schools, which rely heavily on federal and state funding tied to enrollment, could feel the effects if more families opt for alternatives. A decline in enrollment often means fewer dollars per student, which may lead to tighter budgets and difficult decisions about staffing or programs.

At the same time, OBBBA supporters argue that competition from expanded school choice could encourage public schools to adapt and innovate. The overall impact will depend on how widely families adopt the credit and how state legislatures respond to potential funding shortfalls.

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 and parental empowerment, 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.

Tax Planning Tips

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