The Education Freedom Tax Credit

What it is

A federal income-tax credit for cash gifts to Scholarship Granting Organizations (SGOs), which fund K-12 scholarships for students from households at or below 300% of area median income. It starts with gifts made on or after January 1, 2027.

Key facts

• Up to $1,700 per taxpayer per year, as a nonrefundable credit. Unused credit carries forward up to 5 years. The amount for married couples filing jointly is expected to be settled by Treasury's regulations.
• The SGO must be on the list of a state that has opted in — 30 states so far. You do not have to live in that state.
• If you also claim a state tax credit for the same gift, the federal credit is reduced by that amount, and no charitable deduction is allowed for the credited amount.
• Gifts cannot be directed to a particular student.

Before you give

1. Confirm the SGO is on a participating state's list for 2027.
2. Ask how the SGO will receipt a gift to its federal (§25F) account.
3. If you give to a state program too, plan which gift claims which credit.
4. Give cash on or after January 1, 2027, and keep the SGO's receipt.