A new federal tax credit will let Alaskans fund K-12 scholarships, and nonprofits can start signing up now

A new federal tax credit will let people bankroll K-12 scholarships for Alaska students in exchange for a dollar-for-dollar break on their income taxes — and the state is now inviting nonprofits to sign up as the groups that would hand out the money.

Starting in 2027, an individual could donate to one of these approved organizations and claim a federal income-tax credit of up to $1,700 a year — meaning the donation costs the giver little or nothing, since it comes straight off their tax bill. The organizations would then award the pooled donations as scholarships, which the state says could cover tuition, tutoring, books, supplies, career and technical training, and services for students with disabilities. Because many donors' contributions can be combined, individual scholarships could run well above $1,700.

Gov. Mike Dunleavy announced Thursday that Alaska is accepting applications from nonprofits that want to serve as those scholarship organizations, and the state expects to approve its first group by the end of September. That timeline comes with a caveat: it depends on federal rules the Treasury and IRS have not yet issued, so some of how the program will actually work remains to be spelled out.

The scholarships are meant for lower- and middle-income families. Federal law caps eligibility at households earning no more than 300 percent of the area's median income, and requires each organization to verify a family's income and size. The governor's announcement doesn't mention that income limit; it says a recent analysis estimates 95 percent of Alaska's students would qualify, though it doesn't identify the analysis. Each approved organization would have to award scholarships to at least ten students who don't all attend the same school.

"We want Alaska organizations thinking now about the students they can serve," Education Commissioner Deena Bishop said.

The governor's announcement includes no opposing view. Programs that channel tax credits toward private and alternative schooling have drawn national debate — supporters casting them as expanding family choice, critics as diverting public support from traditional public schools — though how Alaska's version will work in practice awaits the federal rules still to come.