States rarely turn down financial aid from Washington. But several Democratic governors are now doing just that, and others may join them. What’s going on? Not surprisingly, the answer involves special-interest politics.

Last year’s omnibus spending bill included a tax credit for donations made to nonprofit organizations that grant scholarships to K-12 students. Such donations are already tax-deductible. Beginning in 2027, instead of reducing taxable income, they’ll reduce total tax bills by up to $1,700, further encouraging giving. Households making up to 300% of their area’s median income will be eligible for the scholarships, provided their states opt in.

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