By: Mark D. Guilfoyle and Andrew J. Vandiver
Kentucky lawmakers have passed House Bill 1, filed by State Representative Kim Moser (R-Taylor Mill). The legislation would allow the Commonwealth to participate in a new federal scholarship tax credit program designed to expand educational options for K-12 students. The bill easily passed with support from nearly 80% of the House and Senate, and its supporters included both Democrats and Republicans.
The bill now sits on Governor Andy Beshear’s desk awaiting signature and could mark a significant development in the ongoing national conversation about school choice and education funding.
If enacted, the measure would allow Kentucky to opt into a federal initiative that provides tax incentives to individuals who donate to nonprofit organizations that fund student scholarships for public and private school students. Those scholarships could then be used by eligible families to help pay for a variety of educational expenses, including private school tuition and other qualifying educational costs. Nonprofits supporting public school schools could raise funds to cover services for students that are not available through existing state or local resources.
The Federal Scholarship Tax Credit Program
The federal program, enacted by Congress in 2025, creates a nationwide framework whereby individuals may receive a dollar-for-dollar federal tax credit for donations made to qualified nonprofit organizations that provide scholarships to K-12 students.
These organizations, often referred to as Scholarship Granting Organizations (SGOs), collect donations from individuals and businesses and distribute scholarship funds to eligible students. The federal law authorizes donors to receive tax credits of up to $1,700 annually for contributions made to these organizations, creating a strong incentive for charitable giving to K-12 education.
If Kentucky participates in the program, scholarships would generally be available to K-12 public and private school students whose household income falls within eligibility thresholds established by federal law. Scholarship-granting organizations would be responsible for verifying eligibility and administering the scholarship funds.
Why State Participation Matters
Although the federal program establishes the framework for tax credits and scholarship funding, participation is not automatic. States must formally opt into the program before residents and students can benefit from it.
House Bill 1 serves that purpose in Kentucky. By opting into the federal program, the state would enable Kentucky taxpayers to receive federal tax credits for donations to approved scholarship organizations operating within the Commonwealth. In turn, those organizations could provide scholarships to qualifying Kentucky students. If state lawmakers had failed to act, the tax credit would still be available for Kentucky taxpayers to contribute to students in other states that have opted in. Kentucky students just wouldn’t be able to benefit from those donations. Over 25 states have already opted in and many more are expected to do so in the coming months.
Supporters of the bill emphasize that participation would allow Kentucky families to access new scholarship opportunities without requiring state tax dollars to fund the program. Because the tax credit is federal, proponents argue that opting in allows Kentucky families to benefit from a program funded through federal tax policy rather than the state budget.
A New Chapter in the School Choice Debate
House Bill 1 arrives at a time when education policy in Kentucky is undergoing significant debate and legal scrutiny. Previous efforts to expand school choice in the Commonwealth—including earlier tax-credit scholarship proposals and charter school funding mechanisms—have faced legal challenges and constitutional questions.
Because the new initiative relies on a federal tax credit rather than a direct state funding mechanism, supporters believe it may offer a pathway for expanding educational choice while avoiding some of the legal barriers that earlier proposals encountered.
What Comes Next
If Governor Beshear signs House Bill 1 into law, Kentucky would officially opt into the federal scholarship tax credit program. The next steps would likely involve identifying or approving scholarship-granting organizations that can operate within the state and establishing administrative procedures for participation.
Local nonprofits and advocates will soon be gearing up to raise awareness amongst families, educators, and organizations about how the scholarship framework operates and what opportunities it may create for Kentucky students.
Expectations are that thousands of Kentucky students will benefit once the program is fully implemented.
Mark Guilfoyle is a Covington lawyer at DBL Law who serves as Chairman of the Alliance for Catholic Urban Education in Northern Kentucky.
Andy Vandiver is a Kentucky lawyer who has long championed school choice.