Earlier this year, a group of tax law academics pointed out more than 100 programs in 33 states offering tax credits in return for charitable donations.
There are 18 states with private school voucher tax credits, including programs in Arizona, Alabama and South Carolina. A number of them offer credits to contributing taxpayers on a dollar-for-dollar basis.
"In a perverse situation, you donate $100 and you get back $137 in the form of state tax credits and deductions," said Carl Davis, research director at the Institute on Taxation and Economic Policy.
Lesley Searcy, executive director of the Alabama Opportunity Scholarship Fund, said their benefactors would feel the effects of the proposed rule.
"The proposed rules issued yesterday are disappointing," she said. "The IRS states that only a 'small percent' of donors nationally will be affected by the rule, but many of those donors are the very ones who support our students."
"We are certainly hoping that a compromise is reached that includes a carve-out for pre-existing scholarship programs like the Alabama Opportunity Scholarship Fund," she said. "The future of thousands of children from low-income families depends on it."