H.R. 10801 — School Freedom Act of 2026

This section terminates each covered Federal elementary and secondary education program no later than June 30, 2027. It prohibits any new Federal appropriations for such programs from the date of enactment and directs the Secretary of Education to wind down activities in an orderly manner. Unobligated balances transfer to the School Freedom Account program. The Secretary must submit a Department of Education reorganization plan that takes effect no later than 18 months after enactment.

This section establishes School Freedom Accounts for eligible individuals and directs the Secretary of the Treasury to deposit the per-pupil federal expenditure amount into each account for every school year beginning on or after July 1, 2027. It adds $2,000 (adjusted annually for inflation using the Personal Consumption Expenditures price index) to accounts of children with disabilities, authorizes parental pre-tax deposits and state deposits, classifies the three funding streams separately, and sets rules for parental access to funds based on whether the child attends public school.

This section converts School Freedom Accounts into Higher Education and Skills Obtainment Funds upon an individual’s completion of secondary school or loss of eligibility for public elementary or secondary school due to age. It classifies transferred federal, parental, and state funds separately, permits their use for higher education costs of attendance, career and technical education, or other postsecondary expenses approved by the Secretary of the Treasury, terminates each fund at age 30, returns unused federal funds to the Treasury and parental funds to the individual, and bars any preapproval or designated marketplace requirement for expenditures.

This section establishes tax treatment for School Freedom Accounts and Higher Education and Skills Obtainment Funds under new Internal Revenue Code sections 530B and 530C. It exempts the accounts from taxation (except for unrelated business income tax), allows parents a deduction for contributions and excludes employer contributions from gross income, excludes distributions used for qualified expenses from gross income, and includes misused distributions in the beneficiary’s gross income with penalties of 20 percent for the first instance and 50 percent for each subsequent instance, plus possible imprisonment of up to one year after the third instance.

This section requires the Secretary of the Treasury to determine, before the end of each school year, the aggregate deposits to School Freedom Accounts categorized by source (Treasury, parent, or State) and by local educational agency, as well as the amounts made available to parents and disbursed to each local educational agency under the applicable regulations.

This section provides that the Act does not affect any aspect of private, religious, or home education providers; exclude them from receiving School Freedom Account funds; or require any educational service provider to alter its creed, practices, admissions policy, or curriculum to receive those funds.

This section prohibits the Secretary of the Treasury from issuing any rule, regulation, or other action that imposes limitations or requirements on the use of a School Freedom Account or Higher Education and Skills Obtainment Fund by a parent or eligible individual, except as authorized by this Act.

This section directs the Comptroller General to submit to Congress a one-time report within 18 months of enactment covering the wind-down of covered federal education programs, reallocation of their unobligated funds to School Freedom Accounts, and Treasury regulations on those accounts. It also requires annual reports beginning one year after enactment that include data on student participation in private schools, charter schools, homeschooling, and microschools; aggregate expenditures outside eligible uses; rollover amounts; conversions to Higher Education and Skills Obtainment Funds; and returns of unused funds to the Treasury.

This section establishes definitions for terms used in the Act, including career and technical education, children with disabilities, cost of attendance, institutions of higher education, and ESEA terms by reference to existing statutes. It defines covered Federal education programs as those supporting elementary or secondary education, excluding the School Freedom Account program, and specifies eligible individuals for School Freedom Accounts as U.S. citizens or nationals who have not completed secondary school and have at least one U.S. citizen or national parent.