119-hr2798

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2798 Introduced in House

    (IH) ]

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119th CONGRESS
 1st Session
 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

 April 9, 2025

Ms. Tenney (for herself, Mr. Kiley of California, Ms. Malliotakis, and 
 Mr. Owens) introduced the following bill; which was referred to the 
 Committee 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 creation or expansion of charter 
 schools.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``High-Quality Charter Schools Act''.

SEC. 2. TAX CREDIT FOR CONTRIBUTIONS TO ELIGIBLE CHARTER SCHOOL 
 ORGANIZATIONS.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 

section 25E the following new section:

``

SEC. 25F. CONTRIBUTIONS TO ELIGIBLE CHARTER SCHOOL ORGANIZATIONS.

 ``

    (a) Allowance of Credit.--In the case of an individual who is a 
citizen or resident of the United States (as defined in 

section 7701

    (a)

    (9) ), there shall be allowed as a credit against the tax imposed 
by this chapter for the taxable year an amount equal to 75 percent of 
the amount of qualified contributions made by the taxpayer during the 
taxable year.
 ``

    (b) Amount of Credit.--The credit allowed under subsection

    (a) in 
any taxable year shall not exceed an amount equal to the greater of--
 ``

    (1) 10 percent of the adjusted gross income of the 
 taxpayer for the taxable year, or
 ``

    (2) $5,000.
 ``
            (c) === Definitions. ===
-For purposes of this section--
 ``

    (1) Charter school.--The term `charter school' has the 
 same meaning given such term in 

section 4310 of the Elementary 
 and Secondary Education Act of 1965 (20 U.S.C. 7221i).
 ``

    (2) Eligible charter school organization.--
 ``
        (A) In general.--The term `eligible charter 
 school organization' means an organization which--
 ``
            (i) is described in 

section 501
            (c) (3) and 
 exempt from tax under 

section 501

    (a) and is not 
 a private foundation,
 ``
            (ii) is a charter management organization 
 (as defined in 

section 4310 of the Elementary 
 and Secondary Education Act of 1965 (20 U.S.C. 
 7221i)), or a charter school (as defined in 
 

section 4310 of the Elementary and Secondary 
 Education Act of 1965 (20 U.S.C. 7221i)), 
 that--
 ``
            (I) has received, or manages a 
 charter school that has received, a 
 grant for the replication or expansion 
 of high-quality charter schools under 
 

section 4305

    (b) of the Elementary and 
 Secondary Education Act of 1965 (20 
 U.S.C. 7221d

    (b) ), or
 ``
            (II) has been selected by a State 
 for eligibility under this section 
 based on a determination by the State 
 that the organization is in the highest 
 10 percent of charter management 
 organizations (as so defined) or 
 charter schools (as so defined) for 
 student performance in the State,
 ``
            (iii) separate from any other funds or 
 contributions received by such organization, 
 maintains and accounts for any contributions 
 made by any person for the purpose of the 
 creation or expansion of charter schools 
 operated or managed by such organization,
 ``
            (iv) obtains from an independent 
 certified public accountant annual financial 
 and compliance audits, and
 ``
            (v) certifies to the Secretary (at such 
 time, and in such form and manner, as the 
 Secretary may prescribe) that the audit 
 described in clause
            (iii) has been completed.
 ``
        (B) Independent certified public accountant.--For 
 purposes of subparagraph
        (A) , the term `independent 
 certified public accountant' means, with respect to an 
 organization, a certified public accountant who is not 
 a person described in 

section 465

    (b)

    (3)
        (A) with respect 
 to such organization or any employee of such 
 organization.
 ``

    (3) Qualified contribution.--The term `qualified 
 contribution' means a charitable contribution (as defined by 
 

section 170
            (c) ) to an eligible charter school organization in 
 the form of cash or marketable securities for the purpose of 
 the creation or expansion of charter schools managed or 
 operated by such organization.
 ``
            (d) Denial of Double Benefit.--Any qualified contribution for 
which a credit is allowed under this section shall not be taken into 
account as a charitable contribution for purposes of 

section 170.
 ``

    (e) Carryforward of Unused Credit.--
 ``

    (1) In general.--If the credit allowable under subsection

    (a) for any taxable year exceeds the limitation imposed by 
 

section 26

    (a) for such taxable year reduced by the sum of the 
 credits allowable under this subpart (other than this section, 
 

section 23, and 

section 25D), such excess shall be carried to 
 the succeeding taxable year and added to the credit allowable 
 under subsection

    (a) for such taxable year.
 ``

    (2) Limitation.--No credit may be carried forward under 
 this subsection to any taxable year following the fifth taxable 
 year after the taxable year in which the credit arose. For 
 purposes of the preceding sentence, credits shall be treated as 
 used on a first-in first-out basis.
 ``

    (f) Application of Volume Cap.--A qualified contribution shall be 
taken into account under this section only if such contribution would 
not result in aggregate tax credits under this section that are in 
excess of the volume cap established under 

section 4 of the High-
Quality Charter Schools Act.''.

    (b) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to 

section 25E the following new 
item:

``

Sec. 25F. Contributions to eligible charter school organizations.''.

SEC. 3. FAILURE OF ELIGIBLE CHARTER SCHOOL ORGANIZATION TO MAKE 
 EXPENDITURES.

    (a) In General.--Chapter 42 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subchapter:

 ``Subchapter I--Eligible Charter School Organizations

``

Sec. 4969. Failure to expend receipts.

``

SEC. 4969. FAILURE TO EXPEND RECEIPTS.

 ``

    (a) In General.--In the case of any eligible charter school 
organization (as defined in 

section 25F
            (c) (2) ) which has been 
determined by the Secretary to have failed to satisfy the requirement 
under subsection

    (b) for any taxable year, any contribution made to 
such organization during the first taxable year beginning after the 
date of such determination shall not be treated as a qualified 
contribution (as defined in 

section 25F
            (c) (3) ) for purposes of 

section 25F.
 ``

    (b) Requirement.--The requirement described in this subsection is 
that the amount of qualified contributions of the eligible charter 
school organization for the taxable year which are expended before the 
expenditure deadline with respect to such receipts shall not be less 
than the required expenditure amount with respect to such taxable year.
 ``
            (c) === Definitions. ===
-For purposes of this section--
 ``

    (1) Required expenditure amount.--
 ``
        (A) In general.--The required expenditure amount 
 with respect to a taxable year is the amount equal to 
 100 percent of qualified contributions for such taxable 
 year--
 ``
            (i) reduced by the sum of such qualified 
 contributions that are retained for reasonable 
 administrative expenses for the taxable year or 
 are carried to the succeeding taxable year 
 under subparagraph
            (C) , and
 ``
            (ii) increased by the amount of the 
 carryover under subparagraph
            (C) from the 
 preceding taxable year.
 ``
        (B) Safe harbor for reasonable administrative 
 expenses.--For purposes of subparagraph
        (A)
            (i) , if the 
 percentage of total qualified contributions to an 
 eligible charter school organization for a taxable year 
 which are used for administrative purposes related to 
 activities for the creation or expansion of charter 
 schools (as defined in 

section 25F
            (c) (1) ) operated or 
 managed by such organization is equal to or less than 
 10 percent, such expenses shall be deemed to be 
 reasonable for purposes of such subparagraph.
 ``
            (C) Carryover.--With respect to the amount of the 
 total qualified contributions to an eligible charter 
 school organization with respect to any taxable year, 
 an amount not greater than 15 percent of such amount 
 may, at the election of such organization or school, be 
 carried to the succeeding taxable year.
 ``

    (2) Expenditures.--The term `expenditures' includes 
 amounts which are formally committed but not expended. A formal 
 commitment described in the preceding sentence may include 
 qualified contributions set aside for the creation or expansion 
 of charter schools operated or managed by such organization for 
 more than one year.
 ``

    (3) Expenditure deadline.--The expenditure deadline with 
 respect to qualified contributions for a taxable year is the 
 first day of the fifth taxable year following the taxable year 
 in which such qualified contributions are received by the 
 eligible charter school organization.
 ``

    (4) Qualified contributions.--The term `qualified 
 contributions' means contributions eligible for the credit 
 under 

section 25F.''.

    (b) Clerical Amendment.--The table of subchapters for chapter 42 of 
such Code is amended by adding at the end the following new item:

 ``subchapter i. eligible charter school organizations''.

SEC. 4. VOLUME CAP.

    (a) Allocation.--

    (1) In general.--For purposes of 

section 25F

    (f) of the 
 Internal Revenue Code of 1986 (as added by this Act), the 
 volume cap applicable with respect to such section shall be 
 $5,000,000,000 of tax credits for taxable years beginning in 
 calendar year 2026 and each subsequent year thereafter, with 
 such amount to be allocated as follows:
        (A) $10,000,000 of tax credits shall be allocated 
 to each State (as defined in 

section 7701

    (a)

    (10) of the 
 Internal Revenue Code of 1986), with such amount to be 
 made available, in the manner described in subsection

    (b) , for any individual residing in such State to claim 
 the credit allowed under 

section 25F of the Internal 
 Revenue Code of 1986 with respect to any qualified 
 contributions (as defined in such section) made by such 
 individual during any taxable year beginning during 
 such calendar year.
        (B) With respect to the amount remaining after the 
 allocation under subparagraph
        (A) , such amount (as 
 adjusted pursuant to paragraph

    (3) ) shall be made 
 available, in the manner described in subsection

    (b) , 
 for any individual to claim the credit allowed under 
 

section 25F of the Internal Revenue Code of 1986 with 
 respect to any qualified contributions made by such 
 individual during any taxable year beginning during 
 such calendar year.

    (2) Carryover.--The amount of any allotment to a State 
 under paragraph

    (1)
        (A) for any calendar year which is not 
 claimed by taxpayers described in such paragraph during such 
 calendar year shall be added to the allotment provided under 
 paragraph

    (1)
        (B) for the subsequent calendar year.

    (3) Increase in nationwide volume cap.--For purposes of 
 paragraph

    (1)
        (B) , if the Secretary determines during any 
 calendar year that the amount of tax credits allowable under 
 

section 25F with respect to qualified contributions made during 
 such calendar year is equal to or greater than 90 percent of 
 the total amount made available under such paragraph for such 
 calendar year, such amount shall be increased by an amount 
 equal to 5 percent of the total amount made available under 
 such paragraph as of January 1 of such calendar year, with such 
 increase to remain in effect for the subsequent calendar year.

    (b) First-Come, First-Serve.--For purposes of applying the volume 
cap under this section, such volume cap shall be applied based on a 
first-come, first-serve basis, as determined based on the date on which 
the taxpayer made the qualified contribution.
            (c) Real-Time Information.--For purposes of this section, the 
Secretary of the Treasury (or the Secretary's delegate) shall develop a 
system to track the amount of qualified contributions made during the 
calendar year for which a credit may be claimed under 

section 25F of 
the Internal Revenue Code of 1986, with such information to be updated 
in real time.

SEC. 5. ORGANIZATIONAL AND PARENTAL AUTONOMY.

    (a) Prohibition of Control Over Eligible Charter School 
Organizations.--

    (1) In general.--An eligible charter school organization 
 shall not, by virtue of participation under any provision of 
 this Act or any amendment made by this Act, be regarded as 
 acting on behalf of any governmental entity.

    (2) Maximum freedom.--To the extent permissible by law, 
 this Act, and any amendment made by this Act, shall be 
 construed to allow eligible charter school organizations 
 maximum freedom to provide for the needs of the students served 
 by the charter schools operated or managed by the organization 
 without governmental control.

    (b) 

=== Definitions. ===
-For purposes of this section, the terms ``charter 
school'' and ``eligible charter school organization'' shall have the 
same meanings given such terms under 

section 25F
            (c) of the Internal 
Revenue Code of 1986 (as added by 

section 2

    (a) of this Act).

SEC. 6. EFFECTIVE DATE.

 The amendments made by this Act shall apply to taxable years 
beginning after December 31, 2025.
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