Arkansas Moves to Join Federal Education Tax Credit Program in 2027

Gov. Sarah Huckabee Sanders, who is leading a sweeping overhaul of Arkansas’ education system, announced Saturday that the state will join a new federal education tax credit scholarship program created under President Donald Trump’s “One Big, Beautiful Bill Act.”

In a news release, Sanders said that beginning Jan. 1, 2027, Arkansas residents will be eligible to participate in the Federal Education Freedom Tax Credit program. Under the initiative, individual taxpayers can claim a nonrefundable federal tax credit for cash contributions made to Scholarship Granting Organizations, which provide scholarships for elementary and secondary education expenses. State officials said the program is expected to channel additional private funding into education and expand scholarship opportunities for students in need, while also reducing the federal tax burden for participating taxpayers.

The Federal Tax Credit Scholarship Program

The Federal Tax Credit Scholarship Program, established on July 4 as part of President Donald Trump’s One Big, Beautiful Bill Act, allows eligible taxpayers to receive a dollar-for-dollar federal tax credit of up to $1,700 for contributions to approved Scholarship Granting Organizations, commonly known as SGOs. Several states have already joined the program. Governors in Iowa, South Dakota, Virginia, and most recently Alabama have announced participation, and Arkansas is now following suit, with more states expected to enroll in the near future.

The initiative is designed primarily to benefit students. To qualify for scholarships, students must come from families earning less than 300 percent of their area median income, and the funds must be used for approved school-related expenses.

Supporters have praised the program for its potential impact. The American Enterprise Institute described it as “the largest and most consequential federal victory ever for educational freedom and school choice.” Some critics have raised concerns that the program could reduce individual income tax revenue, an important source of funding for Arkansas, though state officials say any effect is likely to be minimal. Others have questioned whether funds that would otherwise go to public revenue should be used to support school choice programs, including private schools and homeschooling.

State Leaders on the Move

Gov. Sarah Huckabee Sanders presented Arkansas’ participation in the federal program as part of a larger national movement that complements the state’s existing policies.

“Arkansas is a national leader in school choice, and I’m excited to see that with President Trump back in office, he is taking the education freedom movement nationwide,” Sanders said in a statement. “Combined with the EFA program established by Arkansas LEARNS, which already serves more than 44,000 students, this federal scholarship ensures that Arkansas families have more education options than ever before.”

Arkansas Secretary of Education Jacob Oliva echoed the governor’s message, highlighting how the federal initiative aligns with the state’s ongoing reforms.

“A national message of school choice reinforces the mission Arkansas has already embraced,” Oliva said. “Through the highly subscribed EFA program, we are empowering parents and students with education freedom, and this federal scholarship ensures families can access the education best suited for their child’s needs.”

Arkansas Ongoing Education Overhaul

While some critics have raised concerns about Christian conservatism influencing Arkansas schools, the state has increasingly positioned itself as a testing ground for ambitious education reforms aimed at expanding opportunities and improving outcomes.

In 2023, Governor Sarah Huckabee Sanders signed the Arkansas LEARNS Act, which established the Education Freedom Account program and received strong public support. The program provides financial assistance to parents who wish to enroll their children in private schools, parochial schools, or pursue homeschooling. The initiative has been hailed as a groundbreaking step in state education and has shown early signs of success in initial evaluations.

By the 2025–2026 school year, Education Freedom Accounts became available to every family in the state, and more than 44,000 students now participate.

The LEARNS Act also raised starting pay for public school teachers from $36,000 to $50,000, moving Arkansas from 48th in the nation to the top five. The legislation introduced merit-based bonuses for teachers and made Arkansas one of only four states in the nation to offer teachers up to 12 weeks of paid maternity leave.

Additionally, the law deployed more than 120 literacy coaches to public schools statewide and established tutoring assistance grants for students who require extra academic support. Other programs under Sanders’ education initiatives include partnerships connecting local farmers to school meal programs, further supporting student well-being and community engagement. These reforms have received strong support from the public.

The latest announcement that Arkansas will join the federal education tax credit program came shortly after state lawmakers approved a $32 million funding increase for the Education Freedom Account program. The move underscores the state’s commitment to sustaining its education reforms, leveraging both federal and state resources to support students and families.