An act relating to opting out of the federal tax credit program for contributions to scholarship granting organizations
H.770 would direct Vermont to opt out of a new federal tax credit program created under Section 25F of the Internal Revenue Code for contributions to scholarship-granting organizations. The bill states that states may choose whether to participate in the program, and it designates the Vermont General Assembly as the sole entity authorized to make that election on behalf of the state.
The measure would prohibit Vermont from participating in the federal program and would make any contrary election by another state official or entity void. The bill is framed as an exercise of state control over whether Vermont accepts a federal tax benefit tied to scholarships for expenses at public and private schools, and it would take effect on July 1, 2026.
If enacted, H.770 would add 2 V.S.A. § 24 and formally remove Vermont from participation in the federal scholarship tax credit program under 26 U.S.C. § 25F. It would also shift authority over that federal election to the General Assembly and invalidate any conflicting action by the Governor or another state actor. The practical effect would be to prevent Vermont taxpayers and scholarship-granting organizations from using the federal contribution credit in the state.
Because there are no committee transcripts or recorded votes provided, there is no documented debate or voting pattern to gauge legislative sentiment. Based on the bill text alone, the proposal appears to reflect a clear policy choice by its sponsors to reject participation in the federal scholarship tax credit program and to assert legislative control over the decision.
The main point of contention is likely to be whether Vermont should participate in a federal tax credit intended to support scholarships for public and private school expenses. Another likely issue is separation of powers: the bill expressly makes the General Assembly the sole decision-maker and voids contrary action by other state officials, which could raise questions about executive authority. Supporters would likely emphasize state autonomy and opposition to subsidizing the program, while opponents may argue that opting out would reduce scholarship funding opportunities for families and students.