The bill creates a new refundable tax credit for eligible educators under section 36C of the Internal Revenue Code. The base credit starts at $1,000, plus an additional amount (the applicable amount) based on the student poverty ratio of qualifying schools; the credit applies to eligible elementary, secondary, and certain early childhood educators serving in qualifying schools.
Inflation adjustments are provided for after 2026. The measure also expands deductions for teaching expenses from $250 to $500 and extends eligibility to certain early childhood educators.
It further authorizes mandatory funding for Part A of the Elementary and Secondary Education Act to support teacher salaries, with initial appropriations of $5.2 billion for 2026 and annual increases tied to CPI, plus a framework to reserve funds for salary incentives. Information sharing between the Education and Treasury departments is required to determine qualifying schools and credit amounts, and the bill preserves non-supplanting protections for state and local teacher pay programs.
Finally, the bill defines eligibility standards for teachers and qualifying schools and sets the effective date for these changes.
At a Glance
What It Does
Establishes a new refundable teacher tax credit (36C) with a $1,000 base and an applicable amount tied to student poverty, plus expands the teacher expense deduction to $500 and extends it to eligible early childhood educators. It also creates mandatory funding for Part A to support teacher salaries and sets inflation adjustments starting after 2026.
Who It Affects
Eligible educators (elementary/secondary teachers and qualified early childhood educators) in qualifying schools, plus local and state educational agencies that administer school funding and salary programs.
Why It Matters
The package targets livable wages for educators and provides direct funding to high-need schools, aiming to improve teacher retention and student outcomes while balancing tax incentives with federal spending.
More articles like this one.
A weekly email with all the latest developments on this topic.
What This Bill Actually Does
The RAISE Act of 2025 introduces a new refundable tax credit for eligible teachers and early childhood educators. The credit begins at $1,000 and adds an applicable amount that scales with a school’s student poverty ratio, the type of qualifying school, and 36 points of poverty metrics.
Eligible educators include teachers of record in public elementary and secondary schools and certain licensed early childhood educators who meet state certification requirements and hours thresholds. Qualifying schools generally include public schools served by Title I-eligible local educational agencies, Bureau of Indian Education schools, or early childhood programs funded under federal block grants.
The credit is adjusted for inflation after 2026, with rounding rules to the nearest $50.
The bill also expands the deduction for unreimbursed expenses of elementary and secondary teachers from $250 to $500, and extends eligibility to early childhood educators who meet defined credential and program-hour requirements. In addition, Congress would provide mandatory funding to support local educational agencies maintaining or increasing teacher salaries through Part A of the Elementary and Secondary Education Act, starting at $5.2 billion for 2026 and indexed to CPI thereafter.
A “teacher salary incentive reservation” would direct excess funds to awards that improve teacher compensation, induction, credentialing, and professional development. The Education Department would collect and share necessary data to verify qualifying schools and credit amounts with the Treasury, and certain protections would ensure that credits supplement, not supplant, existing pay programs.
The provisions apply to taxable years beginning after enactment.The bill imposes employer limitations to prevent the tax credit from being used as a bargaining chip or as retaliation against educators, and it preserves the rights of employees under federal labor law to pursue unfair labor practices in cases of credit-related coercion or retaliation. The package is designed to be implemented in coordination with state and local education structures, with the understanding that any federal funds are contingent on appropriations and that the overall focus remains on raising teacher pay and supporting high-need communities.
The Five Things You Need to Know
The bill creates a new refundable teacher tax credit (36C) with a base of $1,000 plus an applicable amount tied to student poverty ratios.
Eligible educators include elementary/secondary teachers and certain early childhood educators who meet credentialing and hours requirements.
Qualifying schools include Title I-eligible public schools, Bureau of Indian Education schools, and certain early childhood programs.
The bill expands the teacher expense deduction to $500 and extends eligibility to early childhood educators, effective for years after enactment.
There is mandatory funding for Part A to support teacher salaries (starting at $5.2B in 2026) with CPI indexing and a salary incentive framework, plus data-sharing provisions and non-supplanting protections.
Section-by-Section Breakdown
Every bill we cover gets an analysis of its key sections.
Short Title
This Act may be cited as the Respect, Advancement, and Increasing Support for Educators Act of 2025 (the RAISE Act of 2025). The section establishes the formal name for the bill and its alignment with the overall policy objective: to improve educator compensation and support for high-need schools.
Refundable Teacher Tax Credit
Section 36C creates a refundable tax credit for eligible educators. The credit is the sum of $1,000 plus an applicable amount that scales with the poverty ratio of the qualifying school, up to the specified limits. Eligible educators include elementary/secondary teachers and certain early childhood educators who meet certification, licensure, and hours requirements. A qualifying school is broadly defined to include Title I-eligible public schools, educational service agencies, Bureau of Indian Education schools, and certain early childhood programs. The section also provides for inflation adjustments after 2026 and adds information-sharing requirements between Education and Treasury to determine eligibility and credit amounts.
Increase in and Expansion of Deduction for Expenses of Elementary and Secondary School Teachers
Subsection (a) increases the deduction for unreimbursed teacher expenses from $250 to $500, with inflation adjustments for post-2026 years. Subsection (b) expands the deduction to cover early childhood educators (as defined by the Act) who meet credentialing and employment-hour requirements. The changes are effective for amounts paid or incurred in taxable years beginning after enactment.
Mandatory Funding to Support Local Educational Agencies
Section 2003 of the Elementary and Secondary Education Act is amended to authorize new funding for Part A. The Secretary of Education would receive $5.2 billion for fiscal year 2026 to carry out Part A, with increases for subsequent years tied to the CPI. A ‘teacher salary incentive reservation’ would allocate a portion of the funds to eligible local educational agencies for programs designed to raise teacher salaries, improve recruitment and retention, and support professional development. Funds must supplement, not supplant, existing state and local funding for teacher compensation. The section also defines eligibility criteria for local educational agencies and outlines permissible uses of funds for salary-related activities.
This bill is one of many.
Codify tracks hundreds of bills on Education across all five countries.
Explore Education in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Elementary and secondary teachers who meet the certification and hours requirements and who serve in qualifying schools stand to receive the new 36C credit, helping offset compensation gaps and attract/retain teachers in high-need districts.
- Early childhood educators who meet credentialing and program-hour requirements gain access to both the 36C credit and an extended deduction for expenses, recognizing their role in foundational learning.
- Local educational agencies and state educational agencies gain a funding pathway to support salary increases and professional development aimed at stabilizing educator ranks in high-need areas.
- Qualifying schools, including Title I schools and Bureau of Indian Education facilities, may experience more resources directed toward teacher pay and retention, potentially reducing turnover.
- Students in high-poverty and high-need schools stand to benefit indirectly from improved teacher retention and potentially more stable classroom environments.
Who Bears the Cost
- Federal Treasury would bear the cost of refundable credits and the new mandatory funding allocations.
- State and local educational agencies could incur administrative costs to implement the salary-support programs and report data to federal authorities.
- Educational service agencies and schools may face data-sharing requirements and reporting obligations.
- Employers could face restrictions on adjusting salary or job assignments to influence credit receipt, as enforced by labor-relations mechanisms.
- The broader taxpayer base bears the cost of funding expanded credits and education programs, through appropriations and potential macroeconomic effects.
Key Issues
The Core Tension
The central tension is between taxpayer-funded direct investment in teacher salaries (via Section 4 funding) and a personal tax credit (Section 2) intended to supplement pay. The design attempts to reconcile immediate earnings gains for educators with longer-term, targeted investments in high-need schools, but it creates questions about distribution, administration, and the alignment of incentives across federal, state, and local actors.
The bill creates a dual approach to boosting educator pay: a refundable tax credit and direct federal funding for salary supports. While the credit provides a personal financial incentive to eligible educators, the mandatory funding for Part A is designed to influence school budgets and salary schedules more directly.
This mix raises questions about how benefits are distributed across districts, how inflation adjustments will affect long-term costs, and whether credits will meaningfully translate into higher take-home pay for teachers given state and local budget constraints. There are also practical considerations around data collection for determining qualifying schools and ensuring compliance with non-supplanting provisions.
Try it yourself.
Ask a question in plain English, or pick a topic below. Results in seconds.