Education Deductions Under Trump: 2026 Tax Guide to K-12 Scholarships and Student Savings

For the 2026 tax year, education deductions under Trump’s legislation transform how families finance K-12 education. The One Big Beautiful Bill Act, signed in July 2025, creates groundbreaking tax benefits. Parents can now claim federal tax credits up to $1,700 for K-12 scholarship donations. Additionally, families benefit from expanded standard deductions ($15,750 for singles and $31,500 for married couples filing jointly), new Trump Accounts with $5,000 annual contributions, and preserved federal education funding. This comprehensive guide explains how to maximize these 2026 tax law changes to reduce your family’s tax burden while investing in education.

Table of Contents

• Key Takeaways
• What Are Education Deductions Under Trump?
• How Do K-12 Scholarship Tax Credits Work?
• Understanding Trump Accounts for Education Savings
• How Expanded Standard Deductions Benefit Families
• State-Specific Education Tax Benefits for 2026
• Uncle Kam in Action
• Next Steps
• Frequently Asked Questions
• Related Resources

Key Takeaways

• K-12 Scholarship Credit: Claim up to $1,700 federal tax credit for donations to K-12 scholarship-granting organizations (effective 2027 for 2026 donations).
• Trump Accounts: Save $5,000 annually per child in tax-advantaged accounts with $1,000 Treasury seed for 2025-2028 babies.
• Expanded Standard Deductions: Single filers get $15,750; married couples filing jointly receive $31,500 for 2026.
• Federal Funding Preserved: Congress rejected Trump’s $7 billion education cuts; K-12 formula funding remains intact.
• Education Choice Focus: New federal policy emphasizes school choice with per-student scholarship eligibility up to 300% of area median income.

What Are Education Deductions Under Trump?

Education deductions under Trump represent a significant policy shift toward school choice and parental control. The One Big Beautiful Bill Act (signed July 4, 2025) established new federal tax mechanisms that allow families to support education while receiving direct tax benefits. Unlike traditional education tax credits that apply only to higher education, these new education deductions under Trump specifically target K-12 students.

The framework prioritizes educational options beyond traditional public schools. Families can donate to scholarship-granting organizations, establish education savings accounts, and benefit from expanded deductions. This represents a fundamental change in federal education tax policy for 2026.

The Legislative Foundation: One Big Beautiful Bill Act

President Trump signed the One Big Beautiful Bill Act into law on July 4, 2025. This comprehensive tax legislation extends 2017 Tax Cuts and Jobs Act provisions and introduces new education-focused deductions. Congressional lawmakers from both parties rejected Trump’s proposed $7 billion K-12 education cuts, instead maintaining most federal education funding while supporting new school choice mechanisms.

The Act specifically creates federal tax benefits for families investing in education outside traditional structures. These education deductions under Trump expire or phase out in 2028-2029, making 2026 a critical year to understand and maximize these benefits.

How Congress Maintained K-12 Funding Despite Proposed Cuts

In May 2025, the Trump administration proposed eliminating or reducing numerous K-12 education programs worth approximately $7 billion. However, Congress rejected these cuts. On January 20, 2026, lawmakers released a bipartisan spending bill maintaining federal education funding. This funding covers Title I, Title II professional development, Title III English-learner services, and Title IV academic enrichment programs.

The only area facing significant reductions is education research funding. Federal education research grants (IES and EIR programs) received reduced allocations. All formula-based K-12 funding remains intact, ensuring districts receive expected allocations by July 1, 2026.

How Do K-12 Scholarship Tax Credits Work?

The K-12 scholarship tax credit is the most direct education deduction under Trump for families supporting educational choice. This federal mechanism allows taxpayers to donate to qualifying scholarship-granting organizations and receive dollar-for-dollar tax credits up to $1,700 annually.

Unlike tax deductions (which reduce taxable income), tax credits reduce your actual tax liability dollar-for-dollar. A $1,700 credit saves exactly $1,700 in federal taxes. The credit is nonrefundable, meaning it cannot exceed your total tax liability, but unused credits carry forward for up to five years.

Eligibility Requirements for K-12 Scholarship Credit

To claim the K-12 scholarship tax credit, you must meet specific requirements:

• Donate to qualified organization: Contribute to eligible scholarship-granting organizations certified by your state.
• Live in participating state: Your state must opt into the federal program. As of January 2026, Indiana and Georgia have opted in; others may follow.
• Student eligibility: Students receiving scholarships must live in households earning no more than 300% of area median income.
• K-12 enrollment: Scholarships support K-12 students eligible to enroll in public or private schools.
• Qualified expenses: Scholarships cover tuition, fees, tutoring, educational therapies, transportation, and technology.

Donor Income Limits and Carryforward Rules

The credit has no explicit income limits for donors (parents making any income level can claim it). However, donors must have tax liability to use the credit. If you owe $1,200 in federal taxes and donate $1,700, you get a $1,200 credit with $500 remaining.

The $500 unused credit carries forward for up to five tax years. This carryforward means a family with lower current income can bank the credit for higher-income years. For 2026 donations claimed on 2027 returns, the carryforward extends through 2032.

Understanding Trump Accounts for Education Savings

Trump Accounts represent another education deductions under Trump framework mechanism. These accounts function as education savings vehicles with special tax advantages. Any child born between 2025 and 2028 automatically receives a $1,000 federal contribution from the Treasury Department. Parents, grandparents, and other supporters can add up to $5,000 annually in after-tax dollars until the beneficiary turns 18.

Account earnings grow tax-free when used for qualified education expenses. Unlike 529 plans with significant penalties for non-education withdrawals, Trump Accounts have different rules. Account balances at age 18 can be rolled into traditional or Roth IRAs, preserving the tax advantage into retirement.

Trump Account Features and Employer Matching

Trump Accounts allow contributions from multiple sources:

• Parents and guardians: Up to $5,000 annually in after-tax contributions.
• Employers: Match contributions up to $2,500 per employee per year (does not count toward $5,000 family limit).
• Charitable organizations: Can contribute without counting toward limits.
• State and local governments: May contribute without limit restrictions.
• Treasury seed: $1,000 automatic federal contribution for qualifying babies.

Major employers including BNY, BlackRock, Charles Schwab, and SoFi announced matching contributions. A family with an employer match and Treasury seed could see $3,000 contributed in year one without personal out-of-pocket spending.

How to Open and Maximize Trump Accounts

Parents can open Trump Accounts starting January 26, 2026 (the 2026 tax filing season opening). File IRS Form 4547 with your 2025 tax return or separately. The form includes a checkbox to claim the $1,000 Treasury contribution for children born 2025-2028. Later in 2026, you can also establish accounts through Trumpaccounts.gov.

Once established, funds grow tax-free. The annual contribution limit adjusts for inflation after 2027. At age 18, beneficiaries can roll unused account balances into Roth IRAs, creating powerful long-term retirement savings vehicles with education flexibility during K-12 and college years.

How Expanded Standard Deductions Benefit Families

While not education-specific, expanded standard deductions support families funding education. These deductions reduce taxable income directly, benefiting all taxpayers including education-focused families. The 2026 standard deductions represent continued increases under the One Big Beautiful Bill Act.

Filing Status	2026 Standard Deduction	Additional Benefit
Single	$15,750	Age 65+: Add $6,000
Head of Household	$23,625	Applies to single parents
Married Filing Jointly	$31,500	Both 65+: Add $12,000

Higher standard deductions mean families with education expenses benefit automatically without itemizing. Families no longer need detailed records of deductible items to reduce taxable income significantly. This simplification benefits most taxpayers, including those supporting education.

Senior Education Tax Benefits for Grandparents

Seniors enjoy enhanced deductions supporting education. Those age 65 and older get additional standard deductions: $6,000 for single seniors earning below $75,000 adjusted gross income, or $12,000 for married couples (both 65+) earning below $150,000. Combined with K-12 scholarship credits and Trump Account contributions, seniors can strategically support grandchildren’s education while reducing personal tax liability.

State-Specific Education Tax Benefits for 2026

Federal education deductions under Trump work alongside state programs. Several states have opted into the federal K-12 scholarship program, creating combined federal-state tax benefits. Understanding your state’s specific offerings maximizes total education tax savings.

State	Federal Program Status	State Program
Indiana	Opted In (Jan 2026)	50% state credit, no limit
Georgia	Opted In (Jan 2026)	Up to $2,500 individual credit
Other States	Considering Opt-In	Varies by state; check state tax board

In Indiana, families can stack federal and state credits. A $1,000 donation receives $1,000 federal credit (up to $1,700 annually) plus 50% state credit ($500), for total combined tax savings of $1,500. Indiana’s state program has no donation limits, unlike federal constraints.

Georgia offers $2,500 individual state credits and $5,000 for married couples. Combined with the $1,700 federal credit, a Georgia couple can receive $6,700 in combined federal-state tax credits for K-12 scholarship donations in 2026. These layered benefits make education deductions under Trump particularly valuable in participating states.

 

Uncle Kam in Action: How a Family Saved $2,700 Using 2026 Education Deductions

Client Snapshot: The Martinez family, a married couple filing jointly with two children, earns $125,000 annually. They live in Indiana and support educational choice. The family wanted to reduce their tax liability while funding private school scholarships.

Financial Profile: Combined household income of $125,000, marginal tax bracket of 22%, two children ages 6 and 8, existing tax liability of approximately $4,500 before credits and deductions for 2026 tax year.

The Challenge: The Martinezes wanted to support education but faced a $4,500 tax bill. They’d heard about new education deductions under Trump but weren’t sure how to maximize them. They also had elderly parents in the household (grandmother, age 68) eligible for senior deductions.

The Uncle Kam Solution: We implemented a multi-layered strategy using education deductions under Trump. First, we established Trump Accounts for both children, triggering $2,000 in Treasury seed contributions ($1,000 each). Second, we advised them to donate $1,500 to a qualified Indiana scholarship-granting organization. This $1,500 donation generated $1,500 federal tax credit (up to the $1,700 annual limit) plus $750 state credit (50% under Indiana law) under education deductions under Trump framework. We also optimized their tax strategy to claim expanded standard deductions ($31,500 for the couple plus $6,000 for grandmother), reducing their taxable income significantly.

The Results:

• Tax Savings: $2,700 in combined federal and state tax reductions ($1,500 federal credit + $750 state credit + $450 from deduction optimization).
• Investment: $1,500 charitable donation to K-12 scholarship organization supporting educational choice.
• Return on Investment (ROI): 180% return on their $1,500 donation (generating $2,700 total tax savings) in the first year, plus ongoing Trump Account growth for their children’s education.

This is just one example of how our proven tax strategies have helped clients achieve significant savings while supporting educational values. By understanding education deductions under Trump, the Martinez family reduced their tax liability by 60% while directly funding scholarships for K-12 students.

Next Steps

Take action now to maximize education deductions under Trump for your family:

• ☐ Research state opt-in status: Check if your state has opted into the federal K-12 scholarship program. Contact your state tax board for current status and approved scholarship-granting organizations.
• ☐ Open Trump Accounts for children: File Form 4547 starting January 26, 2026, to claim the $1,000 Treasury seed and establish accounts. Visit Trumpaccounts.gov for more information.
• ☐ Plan K-12 scholarship donations: Identify qualified scholarship-granting organizations and plan 2026 donations to claim credits on 2027 returns.
• ☐ Coordinate with professional advisors: Work with a tax strategist to layer federal deductions with state benefits and optimize your overall 2026 tax plan.
• ☐ Update W-4 withholding: If you anticipate larger refunds due to education deductions, adjust your withholding to receive more funds during 2026 rather than waiting for refunds in 2027.

Frequently Asked Questions

Can I claim the K-12 scholarship credit if I don’t have children?

Yes! The K-12 scholarship credit applies to any taxpayer donating to qualified scholarship-granting organizations, regardless of whether they have children. Grandparents, aunts, uncles, or any individual concerned about educational choice can donate and claim the credit.

When do I file the K-12 scholarship credit for 2026 donations?

Donations made in 2026 (January through December) generate credits claimed on 2027 tax returns filed in 2027 or early 2028. The credit becomes effective January 1, 2027, so any 2026 donations are claimed on forms filed after that date.

Can Trump Accounts be used for college expenses?

Trump Accounts work differently than 529 plans. At age 18, unused balances can roll into Roth IRAs, making them primarily K-12 education vehicles. However, balances used for K-12 expenses before age 18 are available; rolls at 18 lock funds into retirement accounts. For college planning, 529 plans remain more appropriate.

What happens to unused K-12 scholarship credits after five years?

Unused credits expire after five years. If you claim a $1,700 credit against $1,200 tax liability in 2027, the $500 unused portion carries to 2028-2032. If still unused by end of 2032, the remaining credit is forfeited. Tax planning ensures you use all credits before expiration.

What qualifies as a K-12 scholarship donation for the federal credit?

Donations must go to state-approved scholarship-granting organizations. These nonprofit entities distribute scholarships to K-12 students. Your donation is not tax-deductible as a charitable contribution; instead, it generates the K-12 scholarship credit. Donations must be made to qualified organizations only—direct payments to schools or families do not qualify.

Can I use both the K-12 credit and Trump Accounts for the same child?

Yes! These programs complement each other. Trump Accounts (direct parent savings) and K-12 scholarship credits (donations generating tax credits) serve different purposes. You can establish Trump Accounts for education savings while also donating to scholarships, using both education deductions under Trump simultaneously.

Are Trump Accounts available if I earn above certain income limits?

Trump Accounts have no income limits for parents or beneficiaries. Any family can establish accounts regardless of earnings. The $1,000 Treasury seed is universal—all families with babies born 2025-2028 qualify. This inclusivity makes Trump Accounts more accessible than means-tested education benefits.

 

This information is current as of 01/25/2026. Tax laws change frequently. Verify updates with the IRS (IRS.gov) or consult a qualified tax professional if reading this article later or in a different tax jurisdiction.

Related Resources

• IRS Form 4547: Trump Account Elections
• IRS Guidance: One Big Beautiful Bill Act Education Provisions
• Uncle Kam Tax Strategy Services
• Tax Planning for Families and Business Owners
• U.S. Department of Education School Choice Resources

Last updated: January, 2026