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Bill

S 5322

Federal Tax Credit Scholarship Improvement Act

119th Congress Introduced by Cindy Hyde-Smith

The bill increases and inflation-adjusts the Education Savings/Scholarship tax credit (25F) for low‑income scholarships, with annual COLA-based adjustments after 2026.

Introduced in Senate
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WeVote Research Nonpartisan
Bill Summary · S 5322

Purpose and intent

  • Introduces the Federal Tax Credit Scholarship Improvement Act (S. 5322) in the 119th Congress.
  • The core aim is to modify the tax credit amount available for qualified elementary and secondary education scholarships, increasing and regularizing the credit to improve access to scholarships.

Key provisions

  • Section 25F(b)(1) – Dollar limitation and applicable amount
    • The credit allowed under Internal Revenue Code section 25F(a) for any taxable year shall not exceed the applicable amount, with twice that amount for joint filers.
    • The applicable amount is set at $1,700.
    • Inflation adjustment for after-tax years begins after December 31, 2026:
    • For taxable years beginning after 2026, the $1,700 applicate amount shall be increased by an amount equal to the product of:
      • the current applicable amount ($1,700) and
      • the cost-of-living adjustment (COLA) factor determined under section 1(f)(3) using 2025 as the base year (replacing 2016 in the calculation).
    • Any increase not a multiple of $50 shall be rounded to the nearest $50.
    • The Secretary must publish the adjusted amount not later than November 1 of each calendar year for the following tax year.
  • Effective date
    • The amendment applies to taxable years beginning after December 31, 2025.

Who is affected

  • Taxpayers claiming the Education Savings/Scholarship tax credit under section 25F.
  • Specifically, taxpayers filing jointly vs. other filing statuses are affected by the double-credit cap for joint returns.
  • The bill also affects the administration side: the Internal Revenue Service (via the Secretary) must publish annual adjusted applicable amounts.

Administrative and timeline considerations

  • Annual inflation adjustments beginning in tax years after 2026, with:
    • A published adjusted amount by November 1 each year for the next tax year.
    • Rounding to the nearest $50 when adjustments are not a multiple of $50.
  • The changes are prospective from tax years starting after 2025, creating a new baseline and periodic updates linked to the CPI-based COLA.

Additional notes

  • Sponsored by Senator Cindy Hyde-Smith (with a listed co-sponsor).
  • The bill’s focus is on increasing and adjusting the maximum amount of the qualified elementary and secondary education scholarship credit to potentially broaden access to scholarships through a higher, inflation-adjusted credit.

Compiled from official sources — confirm details with the bill’s official record.

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