Vermont Gov. Phil Scott signed H.933 into law on June 18, 2026, establishing state restrictions on the use of Education Freedom Tax Credit (EFTC) scholarship funds. As of June 30, 2026, Scott had not indicated whether Vermont would participate in the federal program.

H.933 specifies that EFTC scholarship funds can only benefit public school students or students attending independent schools eligible to receive public funds. Under the law, only Approved Independent Schools and Therapeutic Approved Independent Schools may participate. Vermont has four categories of independent schools, but only these two types are eligible for public funding.

The legislation requires scholarship-granting organizations (SGOs) to award scholarships solely for educational programs occurring after school, during school breaks, or for supplemental tutoring. SGOs are prohibited from discriminating against any student based on race, color, religion, ancestry, national origin, sex, sexual orientation, gender identity, place of birth, crime victim status, age, or disability status. Additionally, SGOs must designate providing educational opportunities to economically underprivileged students as their core mission.

H.933 mandates that the governor or a designated representative may opt into the EFTC program annually and audit any SGO participating or seeking to participate. SGOs are required to submit annual reports to the Vermont House and Senate Committees on Education detailing the number and amount of scholarships awarded, donations received, and operating expenses. If any provisions of H.933 are invalidated by a federal act, federal agency rule, or court, the Vermont Attorney General must inform the Governor, the Vermont Speaker of the House, and the President Pro Tempore of the Senate. In such an event, Vermont cannot participate in the program until the state legislature enacts new legislation to address the invalidated provisions.

The U.S. Department of the Treasury had not issued regulations to implement the EFTC program as of June 30, 2026. A June 10, 2026 preview of Treasury regulations indicated that states would likely not be authorized to establish stricter standards for participating SGOs than those federally required. The Treasury Department stated it anticipated proposing federal EFTC regulations in September 2026.

The EFTC provides a nonrefundable federal tax credit of up to $1,700 for individuals who donate to authorized scholarship-granting organizations, with no cap on the total credits offered. The program is set to take effect on January 1, 2027. Eligible students for EFTC scholarships must reside in households earning no more than 300% of the area's median gross income and be eligible for K-12 enrollment. While students in non-participating states cannot receive EFTC scholarships, donors in those states can still receive the federal tax credit by donating to SGOs in participating states.