Scholarship tax credits can help more Kentucky students succeed

Different families have different educational needs. Scholarship tax credits can help many struggling Kentucky students succeed. While the so-called One Big Beautiful Bill Act created the opportunity for these scholarships, each state must opt into the program each year. House Bill 88 could begin Kentucky’s process for adopting a more-robust form of educational freedom for low-to-middle income families.

Here are some upsides for families of a scholarship tax credit program that Kentucky lawmakers might adopt this year.

Empowering families through customization

The "one-size-fits-all" model of education does not always align with a child’s specific learning needs. By providing scholarships that cover not just tuition, but also tutoring, specialized services for students with disabilities, and technology, the credits could allow parents to build a "customized" education. This flexibility can be especially transformative for families who otherwise would lack the financial means to seek supplemental support outside of the traditional classroom.

Protecting the commonwealth’s budget

A primary fiscal argument for the OBBBA credits is their "budget-neutral" nature for the state. Because the credits are applied against federal income tax liability, the funding comes from a redirection of federal dollars rather than the Kentucky General Fund. This allows the state to see an influx of educational investment - potentially millions of dollars - without diverting money away from existing state programs or the SEEK (Support Education Excellence in Kentucky) funding formula.

Promoting healthy competition and innovation

Proponents often suggest that when families have more choices, the entire educational ecosystem benefits. The presence of scholarship-funded options can encourage innovation in curriculum and teaching methods across both private and public sectors. Furthermore, because the federal law requires Scholarship Granting Organizations (SGOs) to serve at least 10 students across multiple schools and maintain a 90% spending rate on scholarships, the program is designed to drive resources directly into the hands of students rather than administrative overhead.

Supporting public school students

Contrary to the belief that these credits only benefit private schools, the OBBBA specifically allows scholarship funds to be used for public school expenses. This could include fees for "out-of-district" enrollment or supplemental services like after-school enrichment and exam prep. By including public school students as eligible recipients, the program can act as a bridge, providing extra resources to the most vulnerable students within the existing public system.

Keeping Kentucky competitive

With neighboring states like Indiana, Ohio, and West Virginia already implementing robust school choice and scholarship programs, supporters argue that Kentucky must opt-in to remain competitive. Providing these options can help the Commonwealth attract and retain families who prioritize educational freedom, ensuring that Kentucky’s workforce remains prepared for the demands of the modern economy.

This modest change avoids those controversies, instead giving the children of low-to-middle income parents the best opportunities for education regardless of their schooling decisions. Public school students can get specialized tutoring, or supplies for school. Private school students can help offset tuition. And Kentucky keeps more of its money in-state, out of the hands and interference of bureaucrats in Washington.

Bluegrass Institute scholar Gary Houchens, Ph.D., is professor and director of the Educational Leadership Doctoral Program at Western Kentucky University.