Nearly 52 million U.S. children could qualify for scholarships under a new federal education tax-credit program scheduled to begin next year, but the state with the largest eligible population has not joined. An analysis released Tuesday by the American Federation for Children estimates that 5,909,150 California children, or 92.4% of the state’s K-12-age population, meet the program’s income threshold. Nationally, the organization estimates that 51,696,553 children, representing 91.7% of the school-age population, could qualify.

The figures provide the first detailed state-level estimate of potential eligibility under the Education Freedom Tax Credit, also known as the Federal Scholarship Tax Credit. The American Federation for Children, a national school-choice advocacy group, based its calculations on Census population estimates, the American Community Survey, federal housing-income limits and Household Pulse Survey data. The estimates measure children who are eligible to enroll in K-12 education and whose household income falls below 300% of the median income for their area. They do not represent confirmed applicants or forecast how many scholarships will actually be awarded.

The income formula makes the program available well beyond families traditionally classified as low income. Because eligibility is tied to local median income, the ceiling varies substantially among counties and metropolitan areas. In expensive regions, qualifying household income can approach $500,000 for a family of four. The analysis estimates that the share of children meeting the threshold ranges from 85.9% in Washington, D.C., to 96.2% in Maine. California’s high housing costs and regional incomes help explain why nearly six million children could qualify under the statutory formula.

State participation remains the decisive condition. The advocacy group counts 31 states that have either opted in or signaled an intention to participate, collectively containing 30.9 million potentially eligible students. The IRS’s official page listed 30 states with completed advance elections as of July 24, including Kentucky but not California or New York. The difference reflects the distinction between completing the federal advance-election process and publicly committing to join. Under either count, California remains outside the program.

The program does not send federal money directly to parents or schools. Beginning Jan. 1, individual taxpayers may make qualified cash contributions to approved nonprofit scholarship-granting organizations, commonly called SGOs, and claim a nonrefundable federal income-tax credit of up to $1,700. The organizations will then award scholarships to eligible students. A participating state must elect to join and submit a list of qualified SGOs to the IRS before donations to those organizations can generate the credit.

Scholarship amounts are not fixed at $1,700. That figure is the maximum annual credit available to an individual donor, while the size and number of student awards will depend on total contributions and each organization’s policies. Federal law requires qualifying SGOs to serve at least 10 students who do not all attend the same school, direct at least 90% of relevant income toward scholarships, verify household eligibility and prevent donors from earmarking contributions for a particular child.

Permitted expenses are expected to include private-school tuition and fees as well as tutoring, books, supplies, transportation, uniforms, technology and certain special-needs services. Public-school students can receive scholarships for eligible supplemental expenses, a provision that has prompted some district leaders to examine whether public systems could partner with existing SGOs or help develop new scholarship strategies. AASA, the School Superintendents Association, began a webinar series in July to help districts evaluate potential uses, donor capacity and administrative requirements.

California’s government has taken no formal step toward an advance election. A spokesperson for Newsom declined to comment when contacted by LA School Report. Rep. Kevin Kiley has publicly urged the governor to participate, and Republican Assemblymember Josh Hoover introduced Assembly Concurrent Resolution 229 on June 23. The nonbinding measure asks Newsom to submit California’s election and approve qualifying scholarship organizations, but the Legislature’s official status page lists it as an active measure pending referral, with no recorded action after it was printed in June.

Supporters argue that participation would expand education funding without withdrawing money from California’s state school budget. They also emphasize that the benefit is not restricted to private-school tuition and could support tutoring or specialized services for students who remain enrolled in district or charter schools. California residents may donate to qualified organizations in participating states, according to advocates, creating the possibility that federal tax-credit-supported contributions from Californians could benefit students elsewhere while California-based organizations remain ineligible.

Opponents view the credit as a federal subsidy for private and religious education and question whether participating schools will face sufficient academic, financial and civil-rights oversight. Private schools generally do not carry the same special-education obligations, public-record requirements or accountability systems as public districts. Critics also warn that a broadly defined income ceiling could direct limited scholarship money to families already able to pay tuition rather than concentrating assistance on students with the greatest financial need. The credit also represents foregone federal revenue even though participation does not directly draw from state education appropriations.

Treasury has previewed several safeguards expected in proposed regulations. Scholarship organizations would generally undergo annual financial and program audits, participating states would take steps to prevent duplicate awards, and donors would receive unique identification numbers that could be matched with IRS filings. Treasury also expects organizations operating in multiple states to maintain separate state accounts. Its preliminary position is that states may apply generally applicable charitable-organization rules but may not impose SGO-specific requirements more restrictive than the federal statute.

Several implementation questions remain unresolved. Treasury expects to issue proposed regulations no later than the end of September, and additional guidance will define the submission of state SGO lists and the precise scope of qualified expenses. Homeschool eligibility may depend on whether state law treats a home school as a school. The American Federation for Children estimates that close to 800,000 otherwise income-eligible homeschooled children could be excluded under anticipated rules, although final guidance could change that result.

For California families, the new estimates do not create an immediate application opportunity. The state would first have to elect participation, identify qualifying organizations and complete federal requirements. Those organizations would then need to raise donations, establish award criteria and open applications. Until that process occurs, California’s nearly six million potentially eligible children remain a statistical population rather than scholarship recipients—a distinction that will place increasing pressure on state leaders as the January 2027 launch approaches.