COMMENTARY: Federal Education Tax Credits Are a Big Issue in the Governor’s Race

by Don Stenberg

Last year, Congress enacted a law that allows American taxpayers in participating states to take up to $1,700 a year in federal tax credits for donating to organizations providing scholarships for students from lower- and middle-income families to attend private and religious K-12 schools.

Under the federal tax credit program, Nebraskans who owe federal income taxes can either send $1,700 to the federal government, or they can donate that $1,700 to a qualified scholarship-granting organization right here in Nebraska.

Before Nebraska taxpayers would be allowed to claim this federal tax credit, the federal law required that governors approve state participation. Governor Jim Pillen gave that approval last year.

One candidate for governor has said that if she is elected, she will revoke that approval, so that Nebraskans will not be able to claim this federal tax credit.

Some say that Nebraskans already voted on this in 2024. But they did not.

In 2024, a majority of Nebraskans voted against using state tax dollars to provide K-12 scholarships for children from lower-income families.

In this year’s election, voters face two different policy positions: Do Nebraskans want to have no choice but to send that $1700 of income tax to the federal government, or do they want to have the choice to keep those federal tax dollars here in Nebraska for K-12 scholarships to private schools for children from lower and middle-income families? That scholarship money could also be used to pay for tutors for public school students who need extra help.

That scholarship money flowing to private schools and to public school tutors will also flow through to the employees and businesses that help the schools do their work. Those employees and businesses will then pay Nebraska state income taxes which will increase Nebraska tax revenues.

As those employees and businesses spend that money on food, housing, healthcare and so forth, it will generate more economic activity and more sales and income tax revenue that can then be used to support public K-12 schools.

In addition, every K-12 student in a private school is one less student whose education must be provided at the expense of Nebraska property, income and sales tax payers, thus saving Nebraska taxpayers money.

Not only that, Federal tax dollars are already used to provide scholarships to college students at private and religious schools, including Pell grants. So there can be no principled objection to using federal tax dollars for K-12 scholarships as well.

That is why one very important question for Nebraskans in this year’s election will be, “Do you want to send more tax dollars to Washington, or do you want to keep those tax dollars here in Nebraska, where they will increase educational choice for lower income and middle income families, provide tutors for public school students who need them, and strengthen our economy?”

— Former Nebraska Attorney General Don Stenberg is an honors graduate of Harvard Law School and the author of a Christian novel, Eavesdropping on Lucifer, available on Amazon.com.