The EFTC is one of the most powerful school choice tools ever created—but who can claim it, and who can benefit from it? Here’s everything you need to know.
What Is the Education Freedom Tax Credit?
The Education Freedom Tax Credit (EFTC) is a federal program launching January 1, 2027 that allows eligible donors to receive a dollar-for-dollar federal tax credit when they contribute to a qualifying K–12 scholarship granting organization (SGO). The credit is worth up to $1,700 per year—meaning a $1,700 gift to a qualifying SGO reduces your federal tax bill by $1,700.
Contributions above $1,700 qualify as a standard 501(c)(3) charitable deduction. There is no cap on how much you can give.
The EFTC is one of the most significant expansions of school choice in American history. By incentivizing more donors to support K–12 scholarship funds, it has the potential to make private school options accessible to millions of families who couldn’t otherwise afford them.
Who Is Eligible to Claim the EFTC?
The EFTC is designed to be broadly accessible. Here’s who qualifies:
Individual Filers
≤ $500K
Adjusted gross income (AGI) at or below $500,000 per year
Married Filing Jointly
≤ $1M
Adjusted gross income (AGI) at or below $1,000,000 per year
Small Businesses
Pass-Through
Sole proprietors, S-corps, LLCs, and other pass-through entities
If your income falls within these ranges, you are eligible to contribute to a qualifying SGO and claim the EFTC beginning January 1, 2027. This covers the vast majority of American taxpayers, individual donors, and small business owners.
How Much Can You Claim?
How the Credit Works
A $1,700 gift becomes a $1,700 credit — dollar for dollar
$1,700
Maximum dollar-for-dollar federal tax credit
$0
Net cost on first $1,700 contributed (credit offsets your tax bill 1:1)
No Cap
Give as much as you want — amounts above $1,700 qualify as a 501(c)(3) deduction
Available beginning January 1, 2027. Consult a tax advisor for your specific situation.
“A dollar-for-dollar tax credit means your gift to a scholarship fund doesn’t cost you — it redirects taxes you were already going to pay.”
The math is straightforward. Donate up to $1,700 to a qualifying SGO, and your federal tax bill goes down by the same amount. You’re not just giving—you’re redirecting money that would have gone to the federal government and sending it directly to a child’s education instead.
And if you want to give more, you can. Every dollar above $1,700 functions as a standard charitable deduction—still a meaningful tax benefit, and still expanding school choice for more students.
Who Is Eligible to Receive Scholarships?
EFTC-funded scholarships go to K–12 students from families that meet income eligibility requirements. These scholarships are distributed through qualifying scholarship granting organizations (SGOs) and allow students to attend private schools that fit their needs—regardless of where they live or what their family earns.
What Is a Scholarship Granting Organization (SGO)?
An SGO is a nonprofit that receives EFTC-eligible contributions and distributes them as K–12 scholarships. When you donate to a qualifying SGO like the AFC Scholarship Fund, you can claim the EFTC on your federal taxes for contributions up to $1,700—and any amount above $1,700 still qualifies as a standard 501(c)(3) charitable deduction.
SGOs like the AFC Scholarship Fund ensure that your donation goes directly to expanding school choice for students who need it most.
For many families, the gap between wanting a better school and being able to afford it comes down to one thing: scholarship funding. The EFTC dramatically expands the pool of donors who can fund those scholarships—which means more students can access opportunities they couldn’t reach before.
Why the EFTC Matters for School Choice
School choice has always had a simple premise: every child deserves access to the school that fits them best, not just the one assigned to them based on their zip code. But for lower-income families, that premise has too often remained theoretical. Without financial support, private school options are simply out of reach.
The EFTC changes that equation. By turning charitable contributions into dollar-for-dollar federal tax credits, it incentivizes more donors to support K–12 scholarships—which means more scholarship funding, more choices, and more students like Mya, Makensie, and Bo who can find the environment where they truly thrive.
What to Do Next
The EFTC launches January 1, 2027. Here’s how to prepare:
Check your eligibility. Use our free eligibility calculator to confirm you qualify and estimate your credit. Sign up for updates. Get notified the moment the EFTC goes live so you can be among the first to contribute and claim your credit. Plan your contribution. Talk to your tax advisor about the best giving strategy for your situation—whether that’s a single $1,700 gift or a larger contribution combining the credit and a deduction.
The Education Freedom Tax Credit is a once-in-a-generation opportunity to expand school choice. Whether you give $1,700 or much more, every dollar you contribute to a qualifying SGO like the AFC Scholarship Fund puts a student one step closer to the school that’s right for them.
