Mackinac Center: Nessel misrepresents federal tax credit legality
In a recent op-ed for the Detroit Free Press, Michigan Attorney General Dana Nessel argued that participating in the Federal Education Freedom Tax Credit Program violates state law and drains public school funding. According to reporting from the Mackinac Center for Public Policy, those claims misrepresent the mechanics and legality of the federal initiative established in 2025.
The Mechanics of the Federal Tax Credit
Under the federal program, families with incomes under three times their area’s median income can apply to scholarship granting organizations, or SGOs, for educational expenses like tutoring, books, and school transportation. Donors fund these organizations and receive a federal tax credit of up to $1,700 for individual filers or $3,400 for joint filers. SGOs must direct at least 90 percent of their income toward scholarships.
States must submit a qualifying list of these organizations to the Internal Revenue Service. However, if a state government declines to opt in, residents can still participate by donating to qualifying SGOs in other participating jurisdictions. More than 30 states have already adopted the program.
Attorney General Nessel misrepresents legality of federal tax credit for education. https://t.co/0h1HNHFhrr
Addressing Claims on Public Funding and Oversight
Nessel wrote in her column that the federal dollars used would be redirected from congressional appropriations designated for economically challenged public schools. The Mackinac Center reports that claim is false because the funds originate from private donors rather than congressional allocations, and the associated tax credit is not set against earmarked public funds.
The attorney general also argued that compiling a list of scholarship organizations would force the state to use public resources to support private school attendance, potentially violating the state constitution. The analysis notes that private schools already register with the state without breaching constitutional limits, meaning routine administrative lists for federal tax compliance would face similar legal standing.
If Michigan refuses to opt in, the tax credits remain available through out-of-state entities. Local families simply lose access to scholarship funds supported by regional donors.