I
119THCONGRESS
1
STSESSION H. R. 2798
To amend the Internal Revenue Code of 1986 to allow a credit against
tax for charitable donations for the creation or expansion of charter schools.
IN THE HOUSE OF REPRESENTATIVES
APRIL9, 2025
Ms. T
ENNEY(for herself, Mr. KILEYof California, Ms. MALLIOTAKIS, and
Mr. O
WENS) introduced the following bill; which was referred to the Com-
mittee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to allow a
credit against tax for charitable donations for the cre-
ation or expansion of charter schools.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘High-Quality Charter 4
Schools Act’’. 5
SEC. 2. TAX CREDIT FOR CONTRIBUTIONS TO ELIGIBLE 6
CHARTER SCHOOL ORGANIZATIONS. 7
(a) I
NGENERAL.—Subpart A of part IV of sub-8
chapter A of chapter 1 of the Internal Revenue Code of 9
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1986 is amended by inserting after section 25E the fol-1
lowing new section: 2
‘‘SEC. 25F. CONTRIBUTIONS TO ELIGIBLE CHARTER 3
SCHOOL ORGANIZATIONS. 4
‘‘(a) A
LLOWANCE OFCREDIT.—In the case of an in-5
dividual who is a citizen or resident of the United States 6
(as defined in section 7701(a)(9)), there shall be allowed 7
as a credit against the tax imposed by this chapter for 8
the taxable year an amount equal to 75 percent of the 9
amount of qualified contributions made by the taxpayer 10
during the taxable year. 11
‘‘(b) A
MOUNT OFCREDIT.—The credit allowed under 12
subsection (a) in any taxable year shall not exceed an 13
amount equal to the greater of— 14
‘‘(1) 10 percent of the adjusted gross income of 15
the taxpayer for the taxable year, or 16
‘‘(2) $5,000. 17
‘‘(c) D
EFINITIONS.—For purposes of this section— 18
‘‘(1) C
HARTER SCHOOL .—The term ‘charter 19
school’ has the same meaning given such term in 20
section 4310 of the Elementary and Secondary Edu-21
cation Act of 1965 (20 U.S.C. 7221i). 22
‘‘(2) E
LIGIBLE CHARTER SCHOOL ORGANIZA -23
TION.— 24
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‘‘(A) IN GENERAL.—The term ‘eligible 1
charter school organization’ means an organiza-2
tion which— 3
‘‘(i) is described in section 501(c)(3) 4
and exempt from tax under section 501(a) 5
and is not a private foundation, 6
‘‘(ii) is a charter management organi-7
zation (as defined in section 4310 of the 8
Elementary and Secondary Education Act 9
of 1965 (20 U.S.C. 7221i)), or a charter 10
school (as defined in section 4310 of the 11
Elementary and Secondary Education Act 12
of 1965 (20 U.S.C. 7221i)), that— 13
‘‘(I) has received, or manages a 14
charter school that has received, a 15
grant for the replication or expansion 16
of high-quality charter schools under 17
section 4305(b) of the Elementary 18
and Secondary Education Act of 1965 19
(20 U.S.C. 7221d(b)), or 20
‘‘(II) has been selected by a 21
State for eligibility under this section 22
based on a determination by the State 23
that the organization is in the highest 24
10 percent of charter management or-25
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ganizations (as so defined) or charter 1
schools (as so defined) for student 2
performance in the State, 3
‘‘(iii) separate from any other funds 4
or contributions received by such organiza-5
tion, maintains and accounts for any con-6
tributions made by any person for the pur-7
pose of the creation or expansion of char-8
ter schools operated or managed by such 9
organization, 10
‘‘(iv) obtains from an independent cer-11
tified public accountant annual financial 12
and compliance audits, and 13
‘‘(v) certifies to the Secretary (at such 14
time, and in such form and manner, as the 15
Secretary may prescribe) that the audit de-16
scribed in clause (iii) has been completed. 17
‘‘(B) I
NDEPENDENT CERTIFIED PUBLIC 18
ACCOUNTANT.—For purposes of subparagraph 19
(A), the term ‘independent certified public ac-20
countant’ means, with respect to an organiza-21
tion, a certified public accountant who is not a 22
person described in section 465(b)(3)(A) with 23
respect to such organization or any employee of 24
such organization. 25
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‘‘(3) QUALIFIED CONTRIBUTION .—The term 1
‘qualified contribution’ means a charitable contribu-2
tion (as defined by section 170(c)) to an eligible 3
charter school organization in the form of cash or 4
marketable securities for the purpose of the creation 5
or expansion of charter schools managed or operated 6
by such organization. 7
‘‘(d) D
ENIAL OFDOUBLEBENEFIT.—Any qualified 8
contribution for which a credit is allowed under this sec-9
tion shall not be taken into account as a charitable con-10
tribution for purposes of section 170. 11
‘‘(e) C
ARRYFORWARD OF UNUSEDCREDIT.— 12
‘‘(1) I
N GENERAL.—If the credit allowable 13
under subsection (a) for any taxable year exceeds 14
the limitation imposed by section 26(a) for such tax-15
able year reduced by the sum of the credits allowable 16
under this subpart (other than this section, section 17
23, and section 25D), such excess shall be carried to 18
the succeeding taxable year and added to the credit 19
allowable under subsection (a) for such taxable year. 20
‘‘(2) L
IMITATION.—No credit may be carried 21
forward under this subsection to any taxable year 22
following the fifth taxable year after the taxable year 23
in which the credit arose. For purposes of the pre-24
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ceding sentence, credits shall be treated as used on 1
a first-in first-out basis. 2
‘‘(f) A
PPLICATION OF VOLUMECAP.—A qualified 3
contribution shall be taken into account under this section 4
only if such contribution would not result in aggregate tax 5
credits under this section that are in excess of the volume 6
cap established under section 4 of the High-Quality Char-7
ter Schools Act.’’. 8
(b) C
LERICALAMENDMENT.—The table of sections 9
for subpart A of part IV of subchapter A of chapter 1 10
of such Code is amended by inserting after the item relat-11
ing to section 25E the following new item: 12
‘‘Sec. 25F. Contributions to eligible charter school organizations.’’.
SEC. 3. FAILURE OF ELIGIBLE CHARTER SCHOOL ORGANI-
13
ZATION TO MAKE EXPENDITURES. 14
(a) I
NGENERAL.—Chapter 42 of the Internal Rev-15
enue Code of 1986 is amended by adding at the end the 16
following new subchapter: 17
‘‘Subchapter I—Eligible Charter School 18
Organizations 19
‘‘Sec. 4969. Failure to expend receipts.
‘‘SEC. 4969. FAILURE TO EXPEND RECEIPTS.
20
‘‘(a) I
NGENERAL.—In the case of any eligible char-21
ter school organization (as defined in section 25F(c)(2)) 22
which has been determined by the Secretary to have failed 23
to satisfy the requirement under subsection (b) for any 24
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taxable year, any contribution made to such organization 1
during the first taxable year beginning after the date of 2
such determination shall not be treated as a qualified con-3
tribution (as defined in section 25F(c)(3)) for purposes 4
of section 25F. 5
‘‘(b) R
EQUIREMENT.—The requirement described in 6
this subsection is that the amount of qualified contribu-7
tions of the eligible charter school organization for the tax-8
able year which are expended before the expenditure dead-9
line with respect to such receipts shall not be less than 10
the required expenditure amount with respect to such tax-11
able year. 12
‘‘(c) D
EFINITIONS.—For purposes of this section— 13
‘‘(1) R
EQUIRED EXPENDITURE AMOUNT .— 14
‘‘(A) I
N GENERAL.—The required expendi-15
ture amount with respect to a taxable year is 16
the amount equal to 100 percent of qualified 17
contributions for such taxable year— 18
‘‘(i) reduced by the sum of such quali-19
fied contributions that are retained for rea-20
sonable administrative expenses for the 21
taxable year or are carried to the suc-22
ceeding taxable year under subparagraph 23
(C), and 24
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‘‘(ii) increased by the amount of the 1
carryover under subparagraph (C) from 2
the preceding taxable year. 3
‘‘(B) S
AFE HARBOR FOR REASONABLE AD -4
MINISTRATIVE EXPENSES .—For purposes of 5
subparagraph (A)(i), if the percentage of total 6
qualified contributions to an eligible charter 7
school organization for a taxable year which are 8
used for administrative purposes related to ac-9
tivities for the creation or expansion of charter 10
schools (as defined in section 25F(c)(1)) oper-11
ated or managed by such organization is equal 12
to or less than 10 percent, such expenses shall 13
be deemed to be reasonable for purposes of 14
such subparagraph. 15
‘‘(C) C
ARRYOVER.—With respect to the 16
amount of the total qualified contributions to 17
an eligible charter school organization with re-18
spect to any taxable year, an amount not great-19
er than 15 percent of such amount may, at the 20
election of such organization or school, be car-21
ried to the succeeding taxable year. 22
‘‘(2) E
XPENDITURES.—The term ‘expenditures’ 23
includes amounts which are formally committed but 24
not expended. A formal commitment described in the 25
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preceding sentence may include qualified contribu-1
tions set aside for the creation or expansion of char-2
ter schools operated or managed by such organiza-3
tion for more than one year. 4
‘‘(3) E
XPENDITURE DEADLINE .—The expendi-5
ture deadline with respect to qualified contributions 6
for a taxable year is the first day of the fifth taxable 7
year following the taxable year in which such quali-8
fied contributions are received by the eligible charter 9
school organization. 10
‘‘(4) Q
UALIFIED CONTRIBUTIONS .—The term 11
‘qualified contributions’ means contributions eligible 12
for the credit under section 25F.’’. 13
(b) C
LERICALAMENDMENT.—The table of sub-14
chapters for chapter 42 of such Code is amended by add-15
ing at the end the following new item: 16
‘‘SUBCHAPTER I. ELIGIBLE CHARTER SCHOOL ORGANIZATIONS ’’.
SEC. 4. VOLUME CAP.
17
(a) A
LLOCATION.— 18
(1) I
N GENERAL.—For purposes of section 19
25F(f) of the Internal Revenue Code of 1986 (as 20
added by this Act), the volume cap applicable with 21
respect to such section shall be $5,000,000,000 of 22
tax credits for taxable years beginning in calendar 23
year 2026 and each subsequent year thereafter, with 24
such amount to be allocated as follows: 25
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(A) $10,000,000 of tax credits shall be al-1
located to each State (as defined in section 2
7701(a)(10) of the Internal Revenue Code of 3
1986), with such amount to be made available, 4
in the manner described in subsection (b), for 5
any individual residing in such State to claim 6
the credit allowed under section 25F of the In-7
ternal Revenue Code of 1986 with respect to 8
any qualified contributions (as defined in such 9
section) made by such individual during any 10
taxable year beginning during such calendar 11
year. 12
(B) With respect to the amount remaining 13
after the allocation under subparagraph (A), 14
such amount (as adjusted pursuant to para-15
graph (3)) shall be made available, in the man-16
ner described in subsection (b), for any indi-17
vidual to claim the credit allowed under section 18
25F of the Internal Revenue Code of 1986 with 19
respect to any qualified contributions made by 20
such individual during any taxable year begin-21
ning during such calendar year. 22
(2) C
ARRYOVER.—The amount of any allotment 23
to a State under paragraph (1)(A) for any calendar 24
year which is not claimed by taxpayers described in 25
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such paragraph during such calendar year shall be 1
added to the allotment provided under paragraph 2
(1)(B) for the subsequent calendar year. 3
(3) I
NCREASE IN NATIONWIDE VOLUME CAP .— 4
For purposes of paragraph (1)(B), if the Secretary 5
determines during any calendar year that the 6
amount of tax credits allowable under section 25F 7
with respect to qualified contributions made during 8
such calendar year is equal to or greater than 90 9
percent of the total amount made available under 10
such paragraph for such calendar year, such amount 11
shall be increased by an amount equal to 5 percent 12
of the total amount made available under such para-13
graph as of January 1 of such calendar year, with 14
such increase to remain in effect for the subsequent 15
calendar year. 16
(b) F
IRST-COME, FIRST-SERVE.—For purposes of 17
applying the volume cap under this section, such volume 18
cap shall be applied based on a first-come, first-serve 19
basis, as determined based on the date on which the tax-20
payer made the qualified contribution. 21
(c) R
EAL-TIMEINFORMATION.—For purposes of this 22
section, the Secretary of the Treasury (or the Secretary’s 23
delegate) shall develop a system to track the amount of 24
qualified contributions made during the calendar year for 25
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which a credit may be claimed under section 25F of the 1
Internal Revenue Code of 1986, with such information to 2
be updated in real time. 3
SEC. 5. ORGANIZATIONAL AND PARENTAL AUTONOMY. 4
(a) P
ROHIBITION OF CONTROLOVERELIGIBLE 5
C
HARTERSCHOOLORGANIZATIONS.— 6
(1) I
N GENERAL.—An eligible charter school or-7
ganization shall not, by virtue of participation under 8
any provision of this Act or any amendment made 9
by this Act, be regarded as acting on behalf of any 10
governmental entity. 11
(2) M
AXIMUM FREEDOM .—To the extent per-12
missible by law, this Act, and any amendment made 13
by this Act, shall be construed to allow eligible char-14
ter school organizations maximum freedom to pro-15
vide for the needs of the students served by the 16
charter schools operated or managed by the organi-17
zation without governmental control. 18
(b) D
EFINITIONS.—For purposes of this section, the 19
terms ‘‘charter school’’ and ‘‘eligible charter school organi-20
zation’’ shall have the same meanings given such terms 21
under section 25F(c) of the Internal Revenue Code of 22
1986 (as added by section 2(a) of this Act). 23
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SEC. 6. EFFECTIVE DATE. 1
The amendments made by this Act shall apply to tax-2
able years beginning after December 31, 2025. 3
Æ
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