Johnston County’s school board has authorized district administrators to form a nonprofit for the new federal Education Freedom Tax Credit. The action creates a possible route for donations and scholarship awards; it does not provide money or establish that scholarships are ready to be distributed. Before families can receive aid through the program, an organization must meet federal requirements and be included on North Carolina’s approved list.
Under the program, individuals can claim a federal tax credit of up to $1,700 for donations to eligible scholarship organizations. Congress enacted the credit in July 2025, and North Carolina opted in after lawmakers overrode Gov. Josh Stein’s veto in June. Donations can begin flowing in 2027, according to the Raleigh News & Observer.
Approval and operation are separate steps
Forming a nonprofit would not by itself make it eligible to award scholarships. The U.S. Department of the Treasury says a qualifying Scholarship Granting Organization generally must be a 501(c)(3) public charity, keep qualified contributions separate, satisfy statutory scholarship and operational requirements, and appear on the applicable state list. North Carolina’s State Education Assistance Authority, which oversees the state’s private-school voucher program, is responsible for publishing its list of eligible organizations and submitting it to the IRS, the News & Observer reports.
That distinction between forming an organization and obtaining approval is visible in another North Carolina effort. Border Belt Independent reported that the Columbus County Educational Opportunity Foundation had gained tax-exempt status but was still seeking state certification as a scholarship-granting organization. It is a comparison, not a prediction of Johnston County’s timeline or outcome.
The federal scholarships could serve students in public or private schools. The News & Observer reports that a Johnston County family would need income below 300% of the area’s gross median income; the district’s report translates that threshold to as much as $300,000 for a family in the county. Eligible expenses could include tutoring, transportation, books, uniforms, technology and special-needs services. For private-school students, the program may also cover tuition and fees.
The proposed federal aid would be separate from North Carolina’s Opportunity Scholarship. The State Education Assistance Authority says that program can pay required tuition and fees at eligible private schools. The News & Observer reports that families could potentially use both forms of assistance.
Participation and impact remain uncertain
Even the number of states participating is not consistent across the cited reporting: the News & Observer described North Carolina as one of 32 states that had opted in, while EdNC counted 30. The difference is unresolved. EdNC also reported that Treasury and the IRS estimate the program could support 600 to 700 scholarship organizations nationwide by 2030; that estimate does not establish how many will operate in North Carolina or how much Johnston County could raise.
The program has drawn criticism over who may benefit. Public Schools First NC said the structure could disproportionately benefit wealthy children, according to the News & Observer, which also reported that Stein has warned the program could come at public schools’ expense while acknowledging public-school students could benefit. An American Federation for Children analysis cited by Carolina Journal estimated that nearly 1.7 million North Carolina children would meet the income eligibility bar. That estimate is not a count of likely participants: actual awards will depend on donations and on scholarship organizations being established and approved.
