Today, the Union of Orthodox Jewish Congregations of America, the nation’s largest Orthodox Jewish umbrella organization, welcomed final regulations issued by the Treasury Department and Internal Revenue Service that protect state-sponsored tax credit scholarship programs for hundreds of thousands of students who attend Jewish and other nonpublic day schools.

The sweeping Tax Cuts and Jobs Act Congress passed in 2017 proposed new limits to the deductibility of state and local taxes (“SALT”).  This new restriction held the prospect of harming the thousands of individuals contributing to state-supported education tax credit scholarship programs. Such programs, which exist in 18 states, primarily help low-income families pay for their children to attend nonpublic schools. The final regulations ensure that donors to scholarship programs who are otherwise below the SALT cap may elect to have their donation treated as a payment of state taxes and therefore still calculated toward a federal tax deduction.

This regulation from Treasury/IRS is consistent with one of the recommendations made by Orthodox Union Executive Vice President Allen Fagin when he testified before Treasury Department officials in November to express concern about the adverse impact the proposed regulations would have on tax credit scholarship programs.

“Such a proposal would be consistent with the goals the Treasury Department was seeking to achieve but also still be consistent with the prior tax policy that permitted these education tax credit programs to benefit thousands of students each year,” Mr. Fagin said in his testimony.

The proposed rules would have had a particularly deleterious effect on Jewish day schools and yeshivas in Pennsylvania and Florida, where 40 percent and 25 percent of Jewish day school students, respectively, receive tax credit scholarships worth more than $31 million combined. Nation-wide, almost 300,000 students receive tax credit scholarships to attend nonpublic schools.

The Orthodox Union has been working together with other leading school choice organizations to press the IRS to modify the proposed regulations. The final regulations take effect August 12.

In the wake of the regulations issued yesterday, Allen Fagin said:
“We appreciate that policymakers at the Treasury Department and IRS – as well as at the Department of Education – were sensitive the concerns we raised and have revised their regulations to support contributions to education scholarship programs.”

Orthodox Union President Mark (Moishe) Bane added:
“Our children’s education shouldn’t be dictated by their family’s ZIP code, but rather by their hard work and using their G-d given talents. These final regulations support greater educational opportunities for all children.”

Orthodox Union Advocacy Center Executive Director Nathan Diament concluded:
“The revised, final regulations – and other steps we anticipate from the Trump Administration – are implementing the President’s promises to support school choice in the United States.  We thank Secretary Mnuchin, Secretary DeVos and Assistant Secretary (for Tax Policy) Kautter for their intensive work on this important matter.”