Soon, you'll be able to redirect a portion of your federal income tax liability toward scholarships at participating K-12 schools. The maximum credit will be $1,700 per year for individuals and $3,400 for married couples filing jointly.
The Education Freedom Tax Credit was enacted last year as part of the One Big Beautiful Bill Act. This month, the IRS released rules that provide more detail.
States, schools, and SGOs
Source: American Federation for Children
Donations must go to an authorized "scholarship-granting organization" (SGO), and states must opt in each year. So far, 31 states have opted in for 2027.
Although schools in states that don't opt in won't be able to receive scholarship funds, donors in those states can still contribute, and the money will be distributed in a participating state.
For example, a donor in Arizona, where the governor vetoed opt-in legislation, could contribute (through a scholarship-granting organization) to a school in Tennessee. Donors may not target a specific student, but they can target a specific school if the scholarship-granting organization permits it.
The new tax-credit program will help students from low-income families, to be sure, but also many others. Students whose household income is at or below 300% of the median income in their area will be eligible for scholarships.
The Federation for Children, a school-choice advocacy group, estimates that more than 50 million students nationwide could be eligible. Scholarships can cover tuition, fees, and other qualifying educational expenses, and funds can go to public or private schools.
More details
The Christian Education Network, one of many scholarship-granting organizations, has compiled this helpful overview of the Education Freedom Tax Credit.
If you'd rather watch than read, the video below from the National Scholarship Granting Organization, a different SGO, explains how donations, scholarships, and credits work.
Keep up-to-date
To stay up to date on participating schools and approved scholarship-granting organizations, regularly check eftccredit.com (a privately run website, not a government site).
Many schools are still filing the required paperwork, so lists of participating schools aren't yet available.
Stay tuned!
