Nebraska opts into federal school choice program after years of political tumult

Governor Jim Pillen signed the executive order at St. Teresa Catholic School in Lincoln, surrounded by students, staff, parents, and members of Nebraska's congressional delegation. The move signals Nebraska's intent to participate in the Federal Scholarship Tax Credit, a program signed into law by President Donald Trump as part of the One Big Beautiful Bill. Under the program, individual taxpayers can direct up to $1,700 to qualified scholarship-granting organizations (SGOs) in exchange for a 100% dollar-for-dollar federal income tax credit, with SGOs retaining up to 10 percent of donations for administrative costs.

Nebraska's path to school choice has been marked by political reversals and voter rejection. In 2023, the Nebraska Legislature passed LB753, the Opportunity Scholarships Act, which created a $100 million tax credit program for donations to scholarship-granting organizations. Voters ultimately rejected that approach, and lawmakers replaced it in 2024 with LB1402, a direct $10 million state appropriation to support private school scholarships for low-income, special needs, and other eligible students. Later that year, voters repealed LB1402 following a heavily funded national and state effort to place the issue on the ballot.

Even as the new federal program takes shape, lawmakers have preserved a $3.5 million "bridge" appropriation in the state budget to provide one-time support for students using the now-repealed state funding until the federal tax credit becomes operational in 2027. Under the 2023 program, Nebraska taxpayers supported $9.57 million of the original $25 million tax credit authorization before the program was replaced. U.S. Rep. Adrian Smith, a Republican who championed the federal tax credit and sits on the Ways and Means Committee, said the program could benefit up to 90 percent of Nebraska's K-12 students across all educational settings.

Pillen's administration will work with school choice advocates to develop a list of qualified SGOs for the U.S. Treasury Department to consider before the January 1, 2027 implementation date. Nebraska remains one of only two states without a formal school choice program, making the federal initiative a significant development for families seeking alternatives to traditional public schools.