I 
117TH CONGRESS 
2D SESSION 
H. R. 8137 
To amend the Internal Revenue Code of 1986 to allow a credit against 
tax for charitable donations to nonprofit organizations providing edu-
cation scholarships to qualified elementary and secondary students. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 16, 2022 
Mrs. WALORSKI (for herself, Mr. OWENS, Mr. KELLY of Pennsylvania, Mr. 
BANKS, Ms. FOXX, Ms. STEFANIK, Mr. BAIRD, Mr. JORDAN, Mrs. MIL-
LER-MEEKS, Mr. MOOLENAAR, and Mr. MCHENRY) introduced the fol-
lowing bill; which was referred to the Committee on Ways and Means, 
and in addition to the Committee on Education and Labor, for a period 
to be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to allow a 
credit against tax for charitable donations to nonprofit 
organizations providing education scholarships to quali-
fied elementary and secondary students. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Educational Choice 
for Children Act’’. 
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SEC. 2. TAX CREDIT FOR CONTRIBUTIONS TO SCHOLAR-
SHIP GRANTING ORGANIZATIONS. 
(a) CREDIT FOR INDIVIDUALS.— 
(1) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code 
of 1986 is amended by inserting after section 25D 
the following new section: 
‘‘SEC. 25E. QUALIFIED ELEMENTARY AND SECONDARY EDU-
CATION SCHOLARSHIPS. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax 
imposed by this chapter for the taxable year an amount 
equal to the amount of qualified contributions made by 
the taxpayer during the taxable year. 
‘‘(b) AMOUNT OF CREDIT.—The credit allowed under 
subsection (a) in any taxable year shall not exceed an 
amount equal to the greater of— 
‘‘(1) 10 percent of the adjusted gross income of 
the taxpayer for the taxable year, or 
‘‘(2) $2,000. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) ELIGIBLE STUDENT.—The term ‘eligible 
student’ means an individual who— 
‘‘(A) is a member of a household with an 
income which is not greater than 300 percent 
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of the area median gross income (as such term 
is used in section 42), and 
‘‘(B) is eligible to enroll in a public ele-
mentary or secondary school. 
‘‘(2) QUALIFIED
CONTRIBUTION.—The term 
‘qualified contribution’ means a charitable contribu-
tion (as defined by section 170(c)) to a scholarship 
granting organization in the form of cash or market-
able securities. 
‘‘(3) QUALIFIED ELEMENTARY OR SECONDARY 
EDUCATION EXPENSE.—The term ‘qualified elemen-
tary or secondary education expense’ has the same 
meaning given the term ‘qualified higher education 
expenses’ under paragraph (3) of section 529(e), ex-
cept that such paragraph shall be applied— 
‘‘(A) by substituting ‘elementary school or 
secondary school (as such terms are defined in 
section 8101 of the Elementary and Secondary 
Education Act of 1965 (20 U.S.C. 7801))’ for 
‘eligible educational institution’ each place it 
appears, and 
‘‘(B) in subparagraph (B) thereof, by sub-
stituting ‘such school’ for ‘such institution’ each 
place it appears. 
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‘‘(4) 
SCHOLARSHIP
GRANTING
ORGANIZA-
TION.—The term ‘scholarship granting organization’ 
means any organization— 
‘‘(A) which— 
‘‘(i) is described in section 501(c)(3) 
and exempt from tax under section 501(a), 
and 
‘‘(ii) is not a private foundation, 
‘‘(B) whose exclusive purpose is to provide 
scholarships for qualified elementary or sec-
ondary education expenses of eligible students, 
and 
‘‘(C)(i) which meets the requirements of 
subsection (d), or 
‘‘(ii) which, pursuant to State law, was 
able, as of the date of the enactment of the 
Educational Choice for Children Act, to receive 
contributions that are eligible for a State tax 
credit if such contributions are used by the or-
ganization to provide scholarships to individual 
elementary and secondary students, including 
scholarships for attending private schools. 
‘‘(d) REQUIREMENTS FOR SCHOLARSHIP GRANTING 
ORGANIZATIONS.— 
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‘‘(1) IN GENERAL.—An organization meets the 
requirements of this subsection if— 
‘‘(A) such organization provides scholar-
ships to 2 or more students, provided that not 
all such students attend the same school, 
‘‘(B) such organization does not provide 
scholarships for any expenses other than quali-
fied elementary or secondary education ex-
penses, 
‘‘(C) such organization provides a scholar-
ship to eligible students with a priority for— 
‘‘(i) students awarded a scholarship 
the previous school year, and 
‘‘(ii) after application of clause (i), 
any such students who have a sibling who 
was awarded a scholarship from such orga-
nization, 
‘‘(D) such organization does not earmark 
or set aside contributions for scholarships on 
behalf of any particular student, 
‘‘(E) such organization takes appropriate 
steps to verify the annual household income and 
family size of eligible students to whom it 
awards scholarships, and limits them to a mem-
ber of a household for which the income does 
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not exceed the amount established under sub-
section (c)(1)(A), 
‘‘(F) such organization— 
‘‘(i) obtains from an independent cer-
tified public accountant annual financial 
and compliance audits, and 
‘‘(ii) certifies to the Secretary (at such 
time, and in such form and manner, as the 
Secretary may prescribe) that the audit de-
scribed in clause (i) has been completed, 
and 
‘‘(G) no officer or board member of such 
organization has been convicted of a felony. 
‘‘(2) INDEPENDENT
CERTIFIED
PUBLIC
AC-
COUNTANT.—For purposes of paragraph (1)(F), the 
term 
‘independent 
certified 
public 
accountant’ 
means, with respect to an organization, a certified 
public accountant who is not a person described in 
section 465(b)(3)(A) with respect to such organiza-
tion or any employee of such organization. 
‘‘(3) PROHIBITION ON SELF-DEALING.— 
‘‘(A) IN GENERAL.—A scholarship grant-
ing organization may not award a scholarship 
to any disqualified person. 
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‘‘(B) DISQUALIFIED
PERSON.—For pur-
poses of this paragraph, a disqualified person 
shall be determined pursuant to rules similar to 
the rules of section 4946. 
‘‘(e) DENIAL OF DOUBLE BENEFIT.—Any qualified 
contribution for which a credit is allowed under this sec-
tion shall not be taken into account as a charitable con-
tribution for purposes of section 170. 
‘‘(f) CARRYFORWARD OF UNUSED CREDIT.— 
‘‘(1) IN
GENERAL.—If the credit allowable 
under subsection (a) for any taxable year exceeds 
the limitation imposed by section 26(a) for such tax-
able year reduced by the sum of the credits allowable 
under this subpart (other than this section, section 
23, and section 25D), such excess shall be carried to 
the succeeding taxable year and added to the credit 
allowable under subsection (a) for such taxable year. 
‘‘(2) LIMITATION.—No credit may be carried 
forward under this subsection to any taxable year 
following the fifth taxable year after the taxable year 
in which the credit arose. For purposes of the pre-
ceding sentence, credits shall be treated as used on 
a first-in first-out basis. 
‘‘(g) APPLICATION OF VOLUME CAP.—A qualified 
contribution shall be taken into account under this section 
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only if such contribution is not in excess of the volume 
cap established under section 3 of the Educational Choice 
for Children Act.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for subpart A of part IV of subchapter A of 
chapter 1 of such Code is amended by inserting 
after the item relating to section 25D the following 
new item: 
‘‘Sec. 25E. Qualified elementary and secondary education scholarships.’’. 
(b) CREDIT FOR CORPORATIONS.— 
(1) IN GENERAL.—Subpart D of part IV of 
subchapter A of chapter 1 of such Code is amended 
by adding after section 45T the following: 
‘‘SEC. 45U. CONTRIBUTIONS TO SCHOLARSHIP GRANTING 
ORGANIZATIONS. 
‘‘(a) GENERAL RULE.—For purposes of section 38, 
in the case of a corporation, the education scholarship 
credit determined under this section for the taxable year 
is the aggregate amount of qualified contributions for the 
taxable year. 
‘‘(b) AMOUNT OF CREDIT.—The credit allowed under 
subsection (a) for any taxable year shall not exceed 5 per-
cent of the taxable income (as defined in section 
170(b)(2)(D)) of the corporation for such taxable year. 
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‘‘(c) QUALIFIED CONTRIBUTIONS.—For purposes of 
this section, the term ‘qualified contribution’ has the 
meaning given such term under section 25E. 
‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction 
shall be allowed under any provision of this chapter for 
any expense for which a credit is allowed under this sec-
tion. 
‘‘(e) APPLICATION OF VOLUME CAP.—A qualified 
contribution shall be taken into account under this section 
only if such contribution is not in excess of the volume 
cap established under section 3 of the Educational Choice 
for Children Act.’’. 
(2) 
CONFORMING
AMENDMENTS.—Section 
38(b) of such Code is amended by striking ‘‘plus’’ at 
the end of paragraph (32), by striking the period 
and inserting ‘‘, plus’’ at the end of paragraph (33), 
and by adding at the end the following new para-
graph: 
‘‘(34) the education scholarship credit deter-
mined under section 45U(a).’’. 
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart D of part IV of subchapter A of 
chapter 1 of such Code, as amended by this Act, is 
amended by adding at the end the following new 
item: 
‘‘Sec. 45U. Contributions to scholarship granting organizations.’’. 
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(c) FAILURE OF SCHOLARSHIP GRANTING ORGANI-
ZATIONS TO MAKE DISTRIBUTIONS.— 
(1) IN GENERAL.—Chapter 42 of such Code is 
amended by adding at the end the following new 
subchapter: 
‘‘Subchapter I—Scholarship Granting 
Organizations 
‘‘Sec. 4969. Failure to distribute receipts. 
‘‘SEC. 4969. FAILURE TO DISTRIBUTE RECEIPTS. 
‘‘(a) IN GENERAL.—In the case of any scholarship 
granting organization (as defined in section 25E) which 
has been determined by the Secretary to have failed to 
satisfy the requirement under subsection (b) for any tax-
able year, any contribution made to such organization dur-
ing the first taxable year beginning after the date of such 
determination shall not be treated as a qualified contribu-
tion (as defined in section 25E(c)(2)) for purposes of sec-
tions 25E and 45U. 
‘‘(b) REQUIREMENT.—The requirement described in 
this subsection is that the amount of receipts of the schol-
arship granting organization for the taxable year which 
are distributed before the distribution deadline with re-
spect to such receipts shall not be less than the required 
distribution amount with respect to such taxable year. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
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‘‘(1) REQUIRED DISTRIBUTION AMOUNT.— 
‘‘(A) IN GENERAL.—The required distribu-
tion amount with respect to a taxable year is 
the amount equal to 100 percent of the total re-
ceipts of the scholarship granting organization 
for such taxable year— 
‘‘(i) reduced by the sum of such re-
ceipts that are retained for reasonable ad-
ministrative expenses for the taxable year 
or are carried to the succeeding taxable 
year under subparagraph (C), and 
‘‘(ii) increased by the amount of the 
carryover under subparagraph (C) from 
the preceding taxable year. 
‘‘(B) SAFE HARBOR FOR REASONABLE AD-
MINISTRATIVE
EXPENSES.—For purposes of 
subparagraph (A)(i), if the percentage of total 
receipts of a scholarship granting organization 
for a taxable year which are used for adminis-
trative purposes is equal to or less than 10 per-
cent, such expenses shall be deemed to be rea-
sonable for purposes of such subparagraph. 
‘‘(C) CARRYOVER.—With respect to the 
amount of the total receipts of a scholarship 
granting organization with respect to any tax-
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able year, an amount not greater than 15 per-
cent of such amount may, at the election of 
such organization, be carried to the succeeding 
taxable year. 
‘‘(2) DISTRIBUTIONS.—The term ‘distribution’ 
includes amounts which are formally committed but 
not distributed. A formal commitment described in 
the preceding sentence may include contributions set 
aside for eligible students for more than one year. 
‘‘(3) DISTRIBUTION DEADLINE.—The distribu-
tion deadline with respect to receipts for a taxable 
year is the first day of the third taxable year fol-
lowing the taxable year in which such receipts are 
received by the scholarship granting organization.’’. 
(2) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 42 of such Code is amended by 
adding at the end the following new item: 
‘‘SUBCHAPTER I. SCHOLARSHIP GRANTING ORGANIZATIONS’’. 
SEC. 3. VOLUME CAP. 
(a) ALLOCATION.— 
(1) IN
GENERAL.—For purposes of sections 
25E(g) and 45U(e) of the Internal Revenue Code of 
1986 (as added by this Act), the volume cap applica-
ble with respect to both such sections shall be 
$10,000,000,000 for calendar year 2023 and each 
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subsequent year thereafter, with such amount to be 
allocated as follows: 
(A) $1,000,000,000 shall be allocated to 
the States, with such amount to be allocated in 
equal amounts to each State. With respect to 
the amount which has been allocated to a State 
for any calendar year— 
(i) 50 percent of such amount shall be 
made available for any individual residing 
in such State to claim the credit allowed 
under section 25E of the Internal Revenue 
Code of 1986 with respect to any qualified 
contributions (as defined in such section) 
made by such individual during any tax-
able year beginning during such calendar 
year, and 
(ii) 50 percent of such amount shall 
be made available for any corporation cre-
ated or organized in such State to claim 
the credit determined under section 45U of 
such Code with respect to any qualified 
contributions made by such corporation 
during any taxable year beginning during 
such calendar year. 
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(B) With respect to the amount remaining 
after the allocation under subparagraph (A)— 
(i) 50 percent of such amount shall be 
made available for any individual to claim 
the credit allowed under section 25E of the 
Internal Revenue Code of 1986 with re-
spect to any qualified contributions made 
by such individual during any taxable year 
beginning during such calendar year, and 
(ii) 50 percent of such amount shall 
be made available for any corporation to 
claim the credit determined under section 
45U of such Code with respect to any 
qualified contributions made by such cor-
poration during any for any taxable year 
beginning during such calendar year. 
(2) CARRYOVER.—The amount of any allotment 
to a State under paragraph (1)(A) for any calendar 
year which is not claimed by taxpayers described in 
such paragraph during such calendar year shall be 
added to the allotment provided to such State under 
such paragraph for the subsequent calendar year. 
(b) FIRST-COME, FIRST-SERVE.—For purposes of 
applying the volume cap under this section, such volume 
cap shall be applied based on a first-come, first-serve 
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basis, as determined based on the date on which the tax-
payer made the qualified contribution. 
(c) REAL-TIME INFORMATION.—For purposes of this 
section, the Secretary of the Treasury (or the Secretary’s 
delegate) shall develop a system to track the amount of 
qualified contributions made during the calendar year for 
which a credit may be claimed under section 25E or 45U 
of the Internal Revenue Code of 1986, with such informa-
tion to be updated in real time. 
SEC. 4. EXEMPTION FROM GROSS INCOME FOR SCHOLAR-
SHIPS FOR QUALIFIED ELEMENTARY OR SEC-
ONDARY EDUCATION EXPENSES OF ELIGIBLE 
STUDENTS. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by inserting before section 140 the following new section: 
‘‘SEC. 139I. SCHOLARSHIPS FOR QUALIFIED ELEMENTARY 
OR SECONDARY EDUCATION EXPENSES OF 
ELIGIBLE STUDENTS. 
‘‘(a) IN GENERAL.—In the case of an individual, 
gross income shall not include any amounts provided to 
any dependent of such individual pursuant to a scholar-
ship for qualified elementary or secondary education ex-
penses of an eligible student which is provided by a schol-
arship granting organization. 
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