Michigan Debates Opting Into Federal Scholarship Tax Credit As School Choice Debate Heats Up Across West Michigan

Michigan Stands at Crossroads on Federal Education Program

LANSING — Michigan faces a critical decision in 2027 that could determine whether families across West Michigan gain access to a new federal scholarship program or see their tax dollars benefit students in other states.

The Education Freedom Tax Credit, approved by Congress last year, would allow Michiganders to donate to scholarship-granting organizations and receive a federal tax credit of up to $1,700. But the program is optional for states, and Michigan has not yet decided whether to opt in.

How the Program Would Work

The federal program operates on a multi-step process that requires state participation:

• States must first choose to participate by making an election to opt-in
• Participating states must provide a certified list of eligible scholarship organizations to the U.S. Treasury
• Taxpayers donate to approved scholarship-granting organizations
• Donors then claim a federal tax credit of up to $1,700 when filing taxes
• The nonprofit organizations use the funds to provide scholarships to students for education-related expenses

The tax credit would apply to contributions made beginning January 1, 2027.

Eligibility Requirements

Under the program rules, students must meet specific criteria to receive scholarships:

• Must be eligible to attend a K-12 public school
• Must come from a household earning no more than 300 percent of the area median income
• Cannot be a disqualified person under federal rules

Scholarship funds could be used for:

• Private school tuition
• Academic tutoring
• Services for students with disabilities
• Other approved K-12 costs

Supporters Say It Could Help Struggling Students

Republican lawmakers and education officials are pushing for Michigan to join the program, arguing it could provide critical resources for students who need additional support.

U.S. Education Secretary Linda McMahon visited Hamtramck Academy on Friday and called on Gov. Gretchen Whitmer to opt Michigan into the program. She emphasized that if Michigan does not join, donations from Michigan taxpayers would go toward students in other states.

The Michigan Legislature has already taken action to encourage the governor to participate. Senate Resolution 88 of 2025, introduced by Sen. Thomas Albert, urges Whitmer to opt Michigan in.

Michigan House Speaker Matt Hall said the federal program is another way to improve student achievement. He told Bridge Michigan that if a student is in a failing school, the scholarship could serve as a lifeline for their family.

"If they are in a failing school, this could be the lifeline for their family with these scholarships to go into another school that will help unlock their potential," Hall said. "So this is another tool that Michigan needs, and I am very hopeful Gov. Whitmer will see that."

State Rep. Tim Kelly, a Republican from Saginaw, said the only reason to not opt into the program would be spite.

Critics Warn It Would Weaken Public Schools

Education advocacy groups and some officials oppose the program, arguing it would divert resources away from public education and set the stage for privatization.

Katherine Nitz, media relations coordinator for the Michigan Education Justice Coalition, told Bridge Michigan that the program would weaken public schools. She said it would wind up gutting public school funding, which she described as already tenuous in Michigan.

"My priority is adequate and equitable funding for public schools in Michigan," said State Superintendent of Public Instruction Glenn Maleyko. "I believe federal resources should be devoted to those priorities."

Only two Democratic governors have indicated their states will likely join the program — Colorado and North Carolina. Support for the program has largely come from Republicans across the country.

What Has Happened So Far

As of March 2026, 27 states have opted into the federal scholarship tax credit program. Michigan has not yet made a decision.

The U.S. Treasury Department and IRS are expected to finalize implementation details in the coming months. Treasury regulations will determine how the federal program operates nationally and how it aligns with existing state programs.

For Michigan to participate, the state must identify qualifying scholarship-granting organizations located in the state. The Treasury will require states to provide certified lists of these organizations annually.

The Decision Comes at Critical Time

Michigan faces a difficult choice as education funding remains a contentious issue across the state. The governor has previously said the program is a high-level talking point and that she needs more information before making a decision.

The debate reflects broader tensions about the role of federal programs in shaping education policy and the balance between public school funding and school choice options.

With the program expected to generate up to $24 billion annually in scholarship funding nationally, depending on participation levels, the decision could have significant implications for students across West Michigan.