A First in American History: What the Education Freedom Tax Credit Could Unlock for Jewish Families

Jewish day schools have a problem, but it isn’t a demand problem. In fact, enrollment keeps climbing, not falling.

The obstacle is affordability, and for the first time, federal tax policy gives donors a powerful new way to help.

The last full national census, conducted for the 2018-2019 school year, counted 292,172 students in 906 Jewish day schools and yeshivas across the country. More recent data suggest that number has continued to grow.

This year, Prizmah, the Jewish day school network, reported rising enrollment across every denomination for the first time on record, but tuition has risen alongside it. The average Jewish day school now charges more than $23,000 a year, according to Prizmah data. For a family with two or three children, that stops looking like a school bill and starts looking like a second mortgage, competing each year with retirement savings, housing costs, and the ordinary expenses of family life.

Nationally, the AFC Scholarship Fund estimates that the gap between average day school tuition and the median financial aid award is roughly $10,000 a year. For decades, schools and communities have worked to narrow that gap with philanthropy and financial aid. Beginning next year, they will have something they have never had before: the federal tax code that works alongside them.

The Education Freedom Tax Credit (EFTC), which takes effect in 2027, is the first federal K-12 scholarship tax credit in American history. Give to a qualified Scholarship Granting Organization (SGO) and receive a dollar-for-dollar federal tax credit: up to $1,700 for individuals, or up to $3,400 for married couples filing jointly. You give first; the credit reduces your federal tax bill when you file. Contributions are pooled to fund scholarships for eligible K-12 students, and the scholarships themselves can be substantially larger than the credit. Donors can also give more than the credit amount; anything above it is treated like any other charitable contribution. In practical terms, taxpayers can direct funds they would otherwise owe in federal income taxes toward scholarships instead.

AFC Scholarship Fund was created to put that opportunity to work at a national scale. A 501(c)(3) Scholarship Granting Organization established by the American Federation for Children, AFC Scholarship Fund will accept contributions, award scholarships, and work with schools and families across participating states. It builds on more than 20 years of AFC’s work expanding educational opportunity across the country.

How the EFTC Works for Families

For families, the process is much simpler than the tax mechanics behind it. You apply for a scholarship through an SGO, like AFC Scholarship Fund, much as you would apply for any other form of financial aid. Your application is considered separately from any individual donor or contribution, and scholarship awards are made based on eligibility and AFC Scholarship Fund’s award criteria.

Eligibility is broad by design. Families can qualify if their household income is at or below 300% of their area’s median gross income, a threshold AFC Scholarship Fund estimates includes roughly 90% of American K–12 students. In participating states, scholarships can help cover tuition and other qualifying K–12 educational expenses beginning in 2027.

A Fund Built for Jewish Day School Families

For Jewish families, we are creating a dedicated Jewish Schools Scholarship Fund. Donors who want to support Jewish education can direct their contributions to that fund, which will provide scholarships for eligible students at Jewish day schools and yeshivas across the country.

That opportunity arrives at an important moment. Enrollment in Jewish day schools is growing, and more families are looking seriously at Jewish education. The challenge is making sure affordability does not prevent schools from welcoming those families, or force families already enrolled to reconsider whether they can remain.

The Jewish Schools Scholarship Fund is built around a simple idea: tuition shouldn’t decide who gets a Jewish education. That is true whether a family has sent children to day school for generations, is discovering it for the first time, or is quietly carrying more than one tuition bill at once. The goal is not to tell families which educational path to choose, but rather to make sure that cost is not what takes that choice away.

Why This Matters for the Whole Community

Affordability matters because the value of a Jewish education extends well beyond a single school year. Research on Jewish day school alumni has found stronger levels of Jewish identity, connection to communal life, and participation in Jewish life among alumni compared with Jewish peers who did not attend day school.

Cost should not be the reason that opportunity slips out of reach.

The Jewish community is beginning to recognize the potential of the EFTC. The Orthodox Union, which spent decades pressing for federal school choice, called it a longtime goal, with OU Advocacy Center Executive Director Nathan Diament pledging to “make sure every Jewish child can access an affordable Jewish education.” Prizmah CEO Paul Bernstein has said the credit could be “transformative” for Jewish day schools if the community mobilizes around it, creating an opportunity to make “a real dent in affordability.” Jewish Federations of North America has likewise worked with governors across the country to encourage state participation in the credit.

That kind of institutional momentum matters, but its impact on Jewish education will depend on whether the full Jewish community can mobilize. To make the most of this historic opportunity, families need to know scholarships are available, synagogues and schools should spread the word, financial advisers can help by telling clients about the credit, and taxpayers ultimately have to choose to direct their contributions toward Jewish education.

The Months Ahead

The work of making this opportunity matter can begin now. Raise the EFTC at your next conversation with your accountant or at your next synagogue board meeting. Tell relatives and friends who care about Jewish education that beginning in 2027, they will be able to direct up to $1,700 of their federal taxes toward scholarships instead, or up to $3,400 for married couples filing jointly. And if you want to support Jewish education through the credit, register your interest now so you’ll know when giving opens on January 1.

For decades, Jewish schools and families have had to confront the affordability challenge largely on their own. Beginning next year, that changes. If the Jewish community makes full use of the EFTC, the credit can do far more than ease individual tuition bills. It can bring Jewish education within reach for more families, help more students remain in the schools they already call home, and direct substantial new resources toward the institutions shaping the next generation of Jewish life in America.

This article is for informational and educational purposes only and does not constitute tax, legal, or financial advice. Tax laws are subject to change. Please consult a qualified tax professional regarding your individual circumstances. The Education Freedom Tax Credit is effective January 1, 2027. Credit amounts and eligibility rules reflect current federal guidance.