S. 1697 — RAISE Act of 2025

This section establishes a new refundable Teacher Tax Credit under IRC §36C (inserted after §36B) for eligible educators equal to $1,000 plus an applicable amount (up to $14,000, or $9,000 for early childhood educators without a bachelor's degree) if employed at a qualifying school. The applicable amount equals the ratio (not to exceed 1) of (1) the percentage points by which the school's student poverty ratio exceeds 39 percent to (2) 36 percentage points, multiplied by $14,000 ($9,000 for such early childhood educators). Eligible educators include (1) elementary or secondary teachers of record who provide direct classroom teaching for at least 75% of full-time hours in the state, meet state certification requirements in their subject, and have met these criteria for at least one prior year; and (2) early childhood educators with a Child Development Associate credential (or equivalent), state certification/licensure, primary responsibility for children's learning/development for at least 75% of full-time hours in an early childhood program, and at least one prior year of such service. Qualifying schools are public elementary/secondary schools eligible for ESEA Title I-A funding (including those served by eligible educational service agencies), Bureau of Indian Education-funded schools, or early childhood programs (as defined in HEA §103) serving children eligible for CCDBG or CACFP. Student poverty ratio means (for schools) the percentage of children meeting ESEA §1113(a)(5) poverty measures or (for early childhood programs) the percentage eligible for CCDBG or CACFP.

This section increases the above-the-line deduction for qualified classroom expenses of eligible educators to $500 (from $250) under IRC §62(a)(2)(D), revises the related inflation adjustment under §62(d)(3) to apply to each dollar amount for cost-of-living adjustments beginning in 2026 (from 2015) with a base year of 2025 (from 2014), and expands eligibility under §62(d)(1)(A) to early childhood educators (as defined in the Higher Education Act of 1965, 20 U.S.C. §1021) who work at least 1,020 hours during the year in an early childhood education program (as defined in 20 U.S.C. §1003). The changes apply to amounts paid or incurred in taxable years beginning after the date of enactment.

This section revises Section 2003 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6603)—governing funding for title II, part A (Supporting Effective Instruction State Grants, which provide formula grants to states and local educational agencies (LEAs) for teacher and principal professional development, recruitment, and retention)—by changing the section heading from “Authorization of appropriations” to “Funding” and striking and replacing subsection (a). The revised subsection (a) provides mandatory appropriations (i.e., both authorized and appropriated from any funds not otherwise appropriated) of $5,200,000,000 for FY2026 to carry out part A (replacing the prior authorization of $2,295,830,000 for each of FY2017–2020, which has expired), with amounts for FY2027 and succeeding fiscal years equal to the prior year’s amount increased by the annual change in the Consumer Price Index for All Urban Consumers. It further requires the Secretary of Education, after any reservations under section 2101(a), to reserve 20% of annual appropriations exceeding $2,200,000,000—the “teacher salary incentive reservation”—for competitive grants to eligible LEAs (those that maintained or increased their teacher salary schedule in the prior school year). These grants are allotted formulaically based on the number of children counted under section 1124(c) (i.e., Title I-eligible children) served by the LEA relative to all eligible LEAs, upon application; recipients may use funds to supplement (not supplant) state efforts for (1) specified teacher/school leader preparation programs; (2) certifications/credentials in high-need fields or advanced credentials (e.g., National Board for Professional Teaching Standards); (3) teacher leadership programs; (4) induction/mentoring for new educators; (5) research-based professional development; or (6) other Secretary-approved activities to promote the teaching profession, attract/retain/diversify educators, or advance educator skills.