North Carolina’s Democratic governor and Republican state lawmakers agree that North Carolina should opt into the new federal school voucher tax credit program. But they don’t agree on which students should benefit from the additional money or who should make that decision.
The program is included in the congressional legislation known as the “One Big Beautiful Bill,” signed into law by President Donald Trump in July. It allows a nonrefundable dollar-for-dollar tax credit of up to $1,700 for donations to a “scholarship granting organization.” It takes effect in tax year 2027. There is no cap on the total amount of credit that can be claimed, so the program could cost the federal government billions of dollars per year in foregone tax revenue.
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School choice and private school advocates praised the new tax credit, while voucher critics and public school advocates said it will further reduce enrollment in, and therefore funding for, public schools.
Republican lawmakers worked quickly last week to pass a law making North Carolina the first state to opt in.
“The Opportunity Scholarship Program is an important program giving parents school choice about where they send their kids to school,” said House Speaker Destin Hall, R-Caldwell. “The provision that was in President Trump's ‘Big Beautiful Bill’ essentially doesn't cost the state any money. It's a federal tax credit of about $1,700 and so it's frankly, in my opinion, a no-brainer for us.”
Under House Bill 87, the North Carolina State Educational Assistance Authority, the agency that oversees state school vouchers, would be tasked with certifying and listing “scholarship granting organizations” that qualify for the tax credit.
Mike Long of Parents for Educational Freedom NC, a pro-voucher advocacy group, said the scholarships will work in combination with state vouchers to help parents cover any gap between the maximum voucher value and the actual cost of private school.
“It just empowers families even more to be able to make decisions and give them the economic opportunity to get their children in schools that best meet their needs,” Long said.
Gov. Josh Stein vetoed the bill Aug. 6, saying that while he supports school choice, additional funding for vouchers would lead to less per-pupil funding for public schools.
“Congress and the Administration should strengthen our public schools, not hollow them out. Cutting public education funding by billions of dollars while providing billions in tax giveaways to wealthy parents already sending their kids to private schools is the wrong choice.”
However, Stein said he believes the federal program could be directed to benefit public school students, and that’s what he intends to do.
“Once the federal government issues sound guidance, I intend to opt North Carolina in so we can invest in the public school students most in need of after-school programs, tutoring, and other resources,” Stein said.
“That's not what this is tailored to do,” said Long. “This is tailored to provide these services for families where public schools are not working for them.”
Sen. Leader Phil Berger, R-Rockingham, criticized the veto, saying state lawmakers, not the governor, have the power to set the state’s tax policy.
But Stein spokeswoman Morgan Hopkins said the federal law specifically gives governors the power to opt into the program. “The federal bill allows for funds to be used for students attending public schools in addition to those attending private or religious schools,” she added.
Robert Enlow leads EdChoice, a national advocacy group for school choice and vouchers. He agrees with Stein’s interpretation of the bill.
“The bill does allow public schools to receive benefits through this tax-credit program, based on our reading of the law,” Enlow told WRAL News.
“I think the real question is, can a governor limit the types of nonprofits that are eligible to receive, to use this program?” Enlow said. “Can a governor like the one in North Carolina say, ‘Hey, we're only going to allow public school foundations?’ I think that's questionable at best.”
WRAL asked Stein’s office if the governor would seek to limit eligibility for the program to public school foundations. They did not immediately respond.
Berger said Republicans will attempt to override the veto. But in the House, they’ll need one Democratic vote to do that.
Two Democrats voted for the bill initially – Rep. Shelly Willingham, D-Edgecombe, and Rep, Carla Cunningham, D-Mecklenburg. WRAL contacted both to ask whether they would vote to override its veto. Neither immediately responded to our question.