Another school voucher program is coming to Indiana. Who will benefit?
10/15/2026
Indiana is no stranger to taxpayer-funded private school vouchers. Beginning with the 2026-27 school year, the state's private school voucher program becomes universal by eliminating any remaining income requirements. And while it gets much less attention than the voucher program, Indiana also offers a 50% state tax credit for donations to scholarship-granting organizations (SGOs), which have traditionally supported private school scholarships.
Beginning Jan. 1, 2027, a new federal program will allow individuals to receive a dollar-for-dollar federal income tax credit of up to $1,700 for contributions to qualifying SGOs. Indiana's existing scholarship tax credit is capped at $18.5 million for the current fiscal year. The federal program has no nationwide cap.
Gov. Mike Braun has already opted Indiana into the program, and several existing SGOs are preparing to participate.
What about public school students?
Unlike Indiana's state scholarship tax credit, the federal program also allows scholarships for students attending public schools. Eligible expenses include tutoring, educational materials, transportation and certain after-school programs. This is an opportunity worth recognizing, but just because public school students are eligible doesn't mean they'll benefit equally.
Existing private school SGOs have fundraising networks and experience administering scholarships. Public schools, meanwhile, provide most educational services without charging tuition, leaving their students primarily eligible for supplemental assistance.
A recent Brookings Institution analysis projects that wealthier counties could generate several times more scholarship funding per child than poorer counties.
Taxpayer dollars deserve accountability
Federal scholarships could also supplement Indiana's existing private school vouchers for eligible expenses not already covered. That could reduce some families' out-of-pocket costs. But ISTA and others have long warned that many private schools cash in on voucher expansions by raising tuition and absorbing more taxpayer money rather than making education more affordable. A 2025 study found that universal voucher expansions likely increased private school tuition by 5% to 10%.
The new federal tax credit doesn't directly reduce Indiana's public school funding. It does, however, reduce federal tax revenue, making transparency and accountability essential.
ISTA believes taxpayer-supported education programs should serve students equitably, protect students' rights and provide meaningful oversight of how funds are spent. Unfortunately, the proposed federal regulations limit states' ability to establish additional safeguards for participating SGOs.
As Indiana prepares for this program, taxpayers deserve to know where the money goes, who benefits and whether public school students have meaningful access. The state and participating SGOs should ensure public school families understand what assistance is available and how to apply.
ISTA remains committed to advocating for reliable investments in the public schools that serve the vast majority of Hoosier families. But as the state moves forward, public school students shouldn't be left behind while established private school SGOs position themselves to benefit. They deserve a fair opportunity to access these resources, with transparency, accountability and safeguards that put students' needs first.