December 17, 2025
Internal Revenue Service
Room 5503
P.O. Box 7604, Ben Franklin Station
Washington, DC 20044

Re: ID: Notice 2025-70/ IRS-2025-0466
Mr. Edward Waters:

The Arc of the United States, a national organization dedicated to advocating for the rights and well-being of individuals with intellectual and developmental disabilities (IDD), is writing to respond to the request for comment on the Individual Tax Credit for Qualified Contributions to Scholarship Granting Organizations.

The Arc of the United States has nearly 600 state and local chapters across the United States. These chapters provide a wide range of services for people with intellectual and developmental disabilities (IDD), including individual and systems advocacy, public education, family support, systems navigation, support coordination services, employment, housing, support groups, and recreation. The Arc chapters are committed to improving the lives of people with IDD and their families.

The Arc has long held the position that any Federal funds directed toward or in support of education must adhere to the IDEA, Section 504, the Americans with Disabilities Act, and other civil rights laws. Specifically, Federal taxpayer dollars should not be used for any private school choice or voucher/voucher-like programs unless Federal education, civil rights, and disability laws apply to the use of the funds.

Our primary concern is the redirection of taxpayer dollars through a federal tax credit to fund scholarships—effectively vouchers—for use at non-public schools that are not required to comply with federal education and civil rights laws. Many such schools may deny admission to students with disabilities who require specialized instruction, services, supports, or accommodations. These schools are also not required to assess student performance against state academic standards in reading, math, and science or ensure graduation with a regular high school diploma, as required of public schools under the Elementary and Secondary Education Act (ESEA).

H.R. 1 creates a mechanism allowing taxpayers to redirect funds they would otherwise owe in federal taxes to scholarship-granting organizations (SGOs), thereby incentivizing private contributions. Although the federal government does not directly transfer funds to SGOs, the effect is the same: tax credits reduce Treasury revenue, and scholarship recipients receive funds generated through a federal tax offset. As a result, U.S. taxpayers effectively subsidize scholarship programs administered by SGOs.

The creation of this unprecedented, uncapped, dollar-for-dollar federal tax credit program heightens the need for strong federal and state oversight, particularly to protect the civil rights of students with disabilities. Treasury must ensure donors can make informed decisions about where their contributions are directed, and parents must be able to make informed choices about whether and where scholarships may be used. Without clear federal regulation, explicit clarification of applicable rights and protections, and transparent data, students with disabilities receiving scholarships through this K–12 tax credit program risk losing protections guaranteed under existing federal law.

With the above context, The Arc offers the following comments:

A.) The Department of Treasury should treat the schools and programs receiving scholarships from SGOs as de facto receiving federal funds, therefore requiring them to guarantee and uphold the rights granted to students with disabilities and their families under federal civil rights laws— namely Title II of the Americans with Disabilities Act (ADA), IDEA and Section 504 of the Rehabilitation Act. This includes in its admission and disciplinary policies.

The interaction between IDEA and voucher or school choice programs is legally complex. As the National Council on Disability has noted, the U.S. Department of Education has long interpreted voucher use as a “parental placement,” under which IDEA-eligible students no longer retain an individual entitlement to a free appropriate public education (FAPE) or related services in those settings. Unless a policy explicitly extends federal protections, students who use vouchers to attend private or religious schools generally relinquish core IDEA rights, including evaluations, an IEP, FAPE, least restrictive environment requirements, and procedural safeguards. Private schools may also deny or terminate enrollment at any time, including on the basis of disability. As a result, families who participate in voucher, education savings account, or similar private choice programs often forfeit critical IDEA rights and services—frequently without clear notice. Absent clear regulation and explicit protections, we are deeply concerned that this tax credit will harm students with disabilities.

B.) The Department of Treasury should require participating states to require SGOs to ensure transparency in the use of every dollar received and distributed. SGOs must compile and publicly share a list of all approved public and private and religious schools, vendors, and/or any education service/educational therapy provider. Additionally, SGOs must compile and publicly share annual disaggregated data about students who receive scholarships. For transparency purposes, reported information should include disaggregated data by socio-economic status, race, disability status, English Learner, and any other demographic data the State requires for all K-12 students, regarding academic achievement, discipline, and other relevant outcomes.

Because this tax credit program will redirect millions, and potentially billions, of federal dollars to SGOs, schools, and vendors, Treasury should require strong reporting and oversight to ensure program integrity. States and/or SGOs should be required to collect and publicly disclose demographic information on participating students and schools. At a minimum, reporting should include students’ race, ethnicity, gender, socioeconomic status, disability status, English learner status, and geographic location (rural, suburban, or urban). Public access to these data is essential for monitoring equitable access, enabling informed parental decision-making, and evaluating whether the program is advancing educational quality—outcomes that cannot be assessed without at least annual public reporting.

To strengthen transparency and oversight, Treasury regulations and guidance should require annual reporting by States that include:

1. A list of participating SGOs, with changes from the prior year identified;
2. A comprehensive accounting of all SGO expenditures and disbursements to public, private or religious schools and vendors, categorized by qualified educational expense (e.g., tuition, tutoring, special education services);
3. The number of participating students, with data disaggregated by race, socio-economic, disability, English Learner status and total enrollment for each participating school;
4. If the schools / vendors that receive SGO funds have any policies/or practices that exclude students with disabilities from participating in the educational program that is being funded; and
5. A list of all public schools, private schools, and vendors participating in the program.
In the case that the Treasury opts to disregard this essential recommendation, we strongly urge that States be allowed to collect any and all data from qualifying SGOs regarding service providers as well as recipient students/families.

As an organization committed to the fair, appropriate, and inclusive treatment of all children in all settings, including students with intellectual and developmental disabilities, we continue to press for policies that ensure students and their families to retain the rights afforded them under federal education laws. If you have any questions or need additional information, please contact Robyn Linscott, Director of Education and Family Policy, The Arc of the United States at linscott@thearc.org.
Sincerely,
Robyn Linscott