Will Michigan Opt Into the Education Freedom Tax Credit? What Michigan Schools Should Do Now

Michigan's status on our state tracker is Studying, and that is the correct word — not declined, not pending, not no action. It is also the word that makes Michigan the hardest state in the country to plan around, because "studying" gives a school board no date to work backward from.

This post supplies the dates. There are two of them, they are closer than most Michigan administrators think, and the work that has to happen before either one arrives starts now.

The Education Freedom Tax Credit (EFTC), the Federal Scholarship Tax Credit (FSTC), the Educational Choice for Children Act (ECCA), and Section 25F are four names for the same federal program — a dollar-for-dollar tax credit of up to $1,700 per year for donations to scholarship granting organizations, effective January 1, 2027.

Where Michigan Actually Stands

Michigan is not on the IRS participating-state list. Thirty states filed an advance election for 2027 as of that list's July 24, 2026 revision; Michigan is not among them, and no election has been filed since.

Three things are true at once, and they are frequently blended into a single wrong summary:

• The governor has not committed. The stated position has been that Michigan is waiting to see the federal guidance before deciding — a posture, not a refusal. Michigan has not joined the six states that declined outright.
• The State Board of Education voted in May 2026 to urge non-participation. That vote is real and it is politically significant, but it is advisory. The board does not hold the pen.
• Nobody except the governor, or a designee under state law, can hold the pen. Participation is an election filed with the IRS on Form 15714. It is not a bill, not a board resolution, and not a ballot question.

That last point is the one Michigan school leaders most often get wrong, because Michigan's education politics run through the legislature and the board. Several of the thirty participating states never passed an opt-in bill at all — some elected by executive order, and three got in when a legislature overrode a governor's veto. If you have been watching Lansing for a bill, you have been watching the wrong instrument.

Decision Point One: The Window That Closes January 1, 2027

Here is the part that has not been widely reported in Michigan.

Elections under the Education Freedom Tax Credit are annual. The statutory default is that a participating state's certified list of scholarship granting organizations is due by January 1 of the applicable year, or as soon as practicable in the program's first year. The advance election on Form 15714 was the mechanism the IRS opened on January 1, 2026 for states wanting to be counted early for 2027 — but in Notice 2025-70 the agency was explicit that "the deadline and procedure for perfecting the Advance Election by submitting the State SGO list will be provided in future guidance."

Which means the question of whether a state that skipped the advance-election window can still elect for 2027, and by when, is genuinely open. It is one of the questions the September proposed regulations have to answer.

The practical shape of that for Michigan: the current governor is in office through December 31, 2026, and is term-limited. If a late election for 2027 is permitted, this administration is the only one that can make it. That is a narrow, lightly discussed window between the November election and the end of the year — the lame-duck period — and it is the only path by which Michigan students see federal scholarship dollars in 2027.

Treat it as unlikely. Do not treat it as closed.

Decision Point Two: November 3, and Why It Means 2028

The second decision point is the gubernatorial election, and it is a clean binary in a way most policy questions are not.

The Republican nominee, U.S. Rep. John James, has said that on day one of the administration Michigan would opt into the federal tax credit scholarship program. The Democratic nominee, Secretary of State Jocelyn Benson, declined to answer the question directly when asked, framing the aim instead as strengthening the public education system, and has been described as opposed to public dollars supporting private education. The Democratic primary opponent who lost in August was flatly against it.

So the arithmetic:

• A new governor is seated in January 2027 — after the January 1 marker for the 2027 program year. Even a genuine day-one signature would therefore be an election for calendar year 2028, not 2027.
• 2028 participation means scholarships for the 2028–29 school year, with donors claiming the credit on returns filed in 2029.
• A Michigan SGO would need to be listed on the state's certified list during 2027, months before students see a dollar.

There is a third path, and it should be assessed honestly rather than hoped at: a legislature can route around a governor. Kentucky, Kansas, and North Carolina all joined that way. In Michigan, overriding a veto requires two-thirds of the members elected to and serving in each chamber — a threshold Michigan has not produced on a contested partisan question in modern practice, and both chambers are on the same November ballot. Plan as if this path does not exist; be pleased if it does.

The Constitutional Question Michigan Will Argue About

No other state has this argument in quite the same form, and every Michigan board meeting on this topic reaches it within twenty minutes.

Article VIII, Section 2 of Michigan's 1963 Constitution is the strictest provision of its kind in the country. It prohibits any "payment, credit, tax benefit, exemption or deductions, tuition voucher, subsidy, grant or loan of public monies or property" provided "directly or indirectly" to support attendance at a nonpublic school. It reaches all nonpublic schools, not only religious ones, and it expressly reaches indirect tax benefits — which is why Michigan families get no state tax deduction for K-12 use of a 529 account while families in most states do.

The argument that the provision does not block an election runs like this: no state money moves. The credit is federal, claimed against federal tax liability. The contribution goes from a private individual to a private 501(c)(3), which awards scholarships that families spend at schools of their own choosing. The state's role is a signature on a federal form and the publication of a list. There is no state payment, no state credit, and no state appropriation to be found anywhere in the chain — a point Michigan participation advocates have made in exactly those terms.

There is a revenue version of the same argument that is worth having on hand, because it answers the budget question rather than the legal one. An election costs the Michigan treasury nothing. Michigan's individual income tax begins with federal adjusted gross income. A federal tax credit is applied after adjusted gross income is computed — it reduces a filer's federal tax bill and leaves the Michigan return untouched. Whatever else is true, opting in does not reduce Michigan's own income tax collections by a dollar.

The honest counterweight: opponents do not principally argue that the state loses tax revenue. They argue that the program functions as a voucher by another route, and that enrollment shifts have downstream costs for public school funding. That is a policy argument, not a constitutional one, and it is the argument that will actually be had.

Nobody should represent the constitutional question as settled. No Michigan court has ruled on an Education Freedom Tax Credit election, and a Michigan election would very likely be argued — in the legislature at minimum, plausibly in court. But note what the question governs and what it does not: it governs whether Michigan participates. It has no bearing on whether a Michigan resident may claim the credit.

What Is Already True, Regardless of Any of This

Michigan taxpayers can claim the full federal credit in 2027, right now, without Michigan doing anything.

Donor eligibility turns on where the SGO is listed and where the student resides — not on where the donor lives. A Michigan resident may contribute to an SGO listed in any of the thirty participating states, designate that state, and claim up to $1,700 ($3,400 for a married couple filing jointly, as two individuals).

The uncomfortable corollary is the whole Michigan story in one sentence: those dollars fund students in Iowa, Ohio, or Tennessee, not in Michigan. Until Michigan is a covered state, Michigan is a net exporter of scholarship money — Michigan taxpayers get the credit, and other states' children get the scholarships.

That is not a talking point; it is an arithmetic exhibit. Michigan files roughly 4.8 million individual returns, and each 1% of a state's filers giving at the cap is about $17 per filer per year in scholarship funding — on Michigan's base, roughly $80 million annually per percentage point of participation, currently exportable only. A 2027 tax year in which Michigan residents claim credits that fund out-of-state students will be the single most persuasive document anyone brings to Lansing in 2027.

The Timeline That Forces the Decision Now

Here is why "wait and see" is not a neutral position for a Michigan school or network.

Suppose the most favorable realistic case: a governor elected in November signs an election in January 2027 for the 2028 program year. Michigan then has to build a listing process and publish a certified list of SGOs, which will close well before January 1, 2028. Working backward from a certified list that closes in the second half of 2027:

• Incorporation and governing documents — a nonprofit corporation with a scholarship-granting purpose, bylaws, an independent board, a conflict-of-interest policy, and a written no-earmarking policy.
• IRS recognition — a Form 1023 determination, on the IRS's timeline rather than yours. This is the long pole and it does not compress.
• Michigan charitable solicitation registration — required before you fundraise, separate from the federal work.
• Program design — the arm's-length award process, income verification against 300% of area median income, the priority rules, and disbursement design against the tuition calendar.
• Then, and only then, the state listing — an application to a process that does not exist yet, at a deadline nobody has published.

That sequence runs nine to fifteen months when it goes well. Start it after Michigan opts in and you will miss the first covered year — which, for a family choosing a school, means missing an entire enrollment cycle.

An organization that begins now and finds Michigan still out in 2028 has lost the cost of formation and gained a working entity. An organization that waits and finds Michigan in has lost the first year entirely. The asymmetry is not close.

What Michigan Schools and Networks Should Do This Fall

If you are a Michigan diocese, Christian school association, classical network, or independent school planning to found or join an SGO:

• Do the formation groundwork on the assumption of a 2028 covered year. Entity, board, policies, and the IRS filing are all state-agnostic. None of that work is wasted if Michigan stays out, and all of it is unrecoverable time if you wait. ClearPath Launch exists for exactly this sequence.
• Organize the demand now, in writing. A state-conditional pledge campaign — commitments that only process if and when Michigan elects — converts a policy argument into a number. Walking into a legislative office with "our families would use this" is an opinion; walking in with signed conditional commitments from named Michigan households is evidence. ClearPath Pledge is built for that.
• Educate your donors on the export asymmetry. Michigan donors who want to give in 2027 can, today, through an SGO listed elsewhere. Some will find that satisfying and some will not — but every donor who understands it becomes an informed advocate for Michigan's election, and the giving habit and receipt infrastructure are in place either way.
• Decide whether the SGO should be yours at all. Forming and operating are two different questions, and for a single school with one campus the multi-school distribution requirement is a genuine structural problem, not a technicality. A Michigan network — a diocese, an association, a consortium of independent schools — clears it by construction. Start here if that question is unsettled.

If you are advocating: the strongest available arguments are the two in this post — that an election costs the state treasury nothing because Michigan's income tax starts from federal AGI, and that Michigan residents are already claiming credits that fund other states' children. Both are checkable. Neither requires anyone to change their view of school choice.

What We Will Update, and When

This page changes on three dates: when the September proposed regulations settle whether a late 2027 election is possible, on November 4 when the race is decided, and in January 2027 when a new administration takes office and the 2028 question becomes live. The Michigan state page carries the current status between updates, and the full fifty-state tracker is re-verified against the IRS list with both dates stamped on it.

A note on currency. This reflects Michigan's status as of the IRS participating-state list dated July 24, 2026, and reporting through August 2026. State positions change, candidate positions change, and the federal listing procedure is not final — verify with counsel before making formation decisions.