Pennsylvania's House overhauls its scholarship-credit programs, and a top Democrat calls the federal §25F credit “intriguing”

Pennsylvania does not yet have a federal §25F decision, but on June 22, 2026 its House gave the clearest public read so far on how the state's Democratic majority thinks about scholarship tax credits. By a 105-97 vote, the chamber passed House Bill 2632, sponsored by Rep. Nikki Rivera (D-Lancaster), which would retire Pennsylvania's two long-running tax-credit-scholarship programs, the Educational Improvement Tax Credit (EITC) and the Opportunity Scholarship Tax Credit (OSTC), after the 2026-27 fiscal year and replace them, beginning in 2027-28, with a single new roughly $680 million “Education Options Tax Credit.” The replacement redirects a large share of the credits toward students in low-income areas and underperforming schools, expands the eligible uses of scholarship money to include childcare, removes the per-pupil scholarship caps, and layers in new public-reporting and school-participation requirements. The bill now heads to the Senate. This is Pennsylvania's own state program, legally distinct from the federal credit, but it runs on the same machinery, donors, scholarship organizations, and a tax credit, that §25F federalizes, which is why the floor debate doubled as a preview of the federal question.

The line most relevant to §25F did not come from the bill text but from the chamber's second-ranking Democrat. House Majority Leader Matt Bradford defended the overhaul on transparency grounds, arguing that “no one should ever fear transparency, especially when you're talking about three-quarters of a billion dollars of state tax dollars,” and, notably, described parts of the federal scholarship credit as “intriguing.” In a state that has not opted into the federal Scholarship Tax Credit (FSTC / ECCA / §25F), a senior House Democrat engaging the federal credit on its merits rather than rejecting it outright is the genuinely new signal here. It is a markedly warmer posture than the reflexive opposition the credit has drawn from public-education groups in other states, and it lands while the decision in Pennsylvania still belongs to the governor.

That governor, Josh Shapiro, remains undecided. His office said it is reviewing HB 2632 and has not tipped whether his federal position has changed; he has repeatedly said he wants to wait for federal guidance to answer key questions before electing Pennsylvania into §25F, with the practical deadline at year-end. Shapiro is not a reflexive opponent of these programs, he has signed budgets that grew the state's tax-credit-scholarship funding by nearly half, even as he has resisted some Republican voucher expansions, which places him in the same watch-and-wait group as Maryland's Wes Moore and the other pending states we have been tracking. The takeaway for anyone reading Pennsylvania's tea leaves: the Democratic establishment here is moving to modernize and expand its scholarship-credit system, not dismantle it, which is the more telling backdrop for whether the state ultimately says yes to the federal credit.

Not everyone reads HB 2632 as friendly, and an honest account has to note the fight. Catholic and private-school advocates warn that ending the existing EITC and OSTC and re-tiering eligibility could strand students who hold scholarships today, Lansdale Catholic publicly cautioned that 173 of its students could lose tuition aid, and the Commonwealth Foundation argued the committee version would leave tens of thousands of scholarship students at risk. Supporters, including progressive outlets that have long criticized the programs' lack of disclosure, call the reporting requirements overdue. For §25F specifically, the federal credit is governed by federal rules that states cannot rewrite, so Pennsylvania's redesign of its own program does not bind the federal one, but the same instinct on display here, route the money but attach transparency and targeting conditions, is exactly the impulse at the center of the national question of whether §25F is a federal floor or a ceiling on what states can require.

What it means going forward: Pennsylvania is one of the largest states still on the federal fence, and it is not starting from scratch. Its existing EITC and OSTC ecosystem already includes the scholarship organizations and donor relationships that, if the state elects in, could become §25F-eligible scholarship granting organizations, the same intake, eligibility-verification, and disbursement work a compliant program needs, which can run on software built for §25F. The bill now moves to the Senate, and Shapiro's federal decision is due by year-end; both are worth watching together, because the program design Pennsylvania settles on for its own credit will shape the terms it would want around the federal one. Operators sizing up the state can see the current national field in the SGO directory, and Pennsylvania's status is tracked on our Pennsylvania state page and the national participation map.