RAISE Act of 2025
The RAISE Act of 2025 would establish a new, refundable federal tax credit to help boost teacher and early childhood educator wages, by targeting support to educators working in higher-poverty schools. Specifically, it creates a 36C teacher tax credit that is equal to $1,000 plus an “applicable amount” that scales with how poverty-prone a qualifying school is. The applicable amount can be substantial, potentially up to $14,000 for elementary/secondary teachers (or up to $9,000 for certain early childhood educators without a bachelor’s degree), depending on the school’s student poverty ratio. The credit is designed to supplement, not replace, state and local pay. The bill also expands, increases, and inflation-adjusts educator expense deductions, and it mandates new federal funding for local educational agencies to maintain or raise teacher salaries, with a focus on programs that improve professional development and leadership. In addition to creating the credit and expanding deductions, the act includes data-sharing provisions between the Department of Education and the Treasury to verify qualifying schools and appropriate credit amounts, and it imposes safeguards to prevent the credit from being used to justify reductions in teacher pay or as punishment in the workplace. It assigns enforcement responsibilities to federal labor authorities for potential unfair labor practices related to the credit. The changes would apply to tax years beginning after enactment and include mandatory funding for LEAs beginning in fiscal year 2026.
Key Points
- 1Establishment of a refundable teacher tax credit (Sec. 36C). Eligible educators can claim a credit equal to $1,000 plus an applicable amount, with the applicable amount determined by school poverty metrics (and scaled so it cannot exceed a full payment for the highest-poverty scenarios). The credit is refundable, meaning if the credit exceeds tax liability, the excess is paid to the taxpayer.
- 2Definitions and eligibility. Eligible educators include elementary/secondary teachers and early childhood educators. A “qualifying school” is a public elementary/secondary school with Title I eligibility or related educational service entities, Bureau of Indian Education schools, or certain early childhood programs funded under federal programs. The size of the credit for each educator depends on the “student poverty ratio” of the qualifying school.
- 3Information sharing and verification. The Department of Education would collect and share necessary information to determine whether a school is qualifying and to calculate the correct credit amount. Qualifying schools would provide required data to enable the Department to support this process.
- 4Safeguards for pay and labor relations. The bill prohibits reducing teacher pay or loan-forgiveness amounts due to eligibility for the credit and prevents employers from punishing or reassigning educators to reduce their credit. The Federal Labor Relations Authority would have enforcement authority over violations, ensuring the credit does not undermine existing pay structures or workers’ rights.
- 5Inflation adjustments. The credit’s dollar amounts would be adjusted annually for inflation after 2026, with rounding to the nearest $50, and accompanying conforming changes to related tax provisions.
- 6Expansion and adjustment of educator expense deduction (Sec. 3). The deduction for expenses of elementary and secondary school teachers increases from $250 to $500, with inflation-adjusted increases in future years. The deduction would also be expanded to cover eligible early childhood educators who work a qualifying number of hours (notably, at least 1,020 hours per year) in an early childhood program. This applies to amounts paid or incurred after enactment.
- 7Mandatory funding to support teacher salaries (Sec. 4). The bill authorizes and appropriates funds to bolster local educational agencies that maintain or increase teacher salaries. For FY 2026, $5.2 billion would be provided for Part A of the Elementary and Secondary Education Act, with future years’ funding increased by the CPI. A “teacher salary incentive reservation” would be created to distribute a portion of funds to eligible LEAs to support salary initiatives and related activities (e.g., professional development, certification, mentoring, leadership programs). The funds are intended to supplement, not supplant, state or local funds for teacher pay.