Employers have always played a quiet but important role in education. They sponsor robotics teams, fund classroom supplies and give employees time off to volunteer. Starting January 1, 2027, they will have a new way to help: making it easy for employees to support K-12 scholarships through the Education Freedom Tax Credit, and adding company dollars on top.
This matters because trust travels through relationships. A September 2026 Philanthropy Roundtable article on the new federal tax credit pointed to employers, alongside schools and faith communities, as trusted institutions that can connect families and donors to scholarships. Your workplace is one of the places people already look for credible information about giving.
This guide explains how the credit works for employees, how company giving is treated, and how to design a workplace giving program that helps more students.
First, the Basics: Who Can Claim the Credit
The Education Freedom Tax Credit (EFTC) is a federal tax credit for individual taxpayers. Here’s how it works. Give to a qualified Scholarship Granting Organization (SGO), a nonprofit that turns donor contributions into K-12 scholarships, and receive a dollar-for-dollar federal tax credit: up to $1,700 for individuals, or up to $3,400 for married couples filing jointly. You give first; the credit reduces your federal tax bill when you file.
Businesses cannot claim the credit. Corporations, partnerships and other entities have no path to it under the law. That shapes how an employer program should be built, and it leads to two separate tracks.
Track One: Employees Give as Individuals
The core of any workplace program is the individual employee gift. Each employee who donates in cash to a qualified SGO can claim the credit on their federal return, up to $1,700, or up to $3,400 for married couples filing jointly, as long as they have enough federal tax liability to use it. Unused credit can generally carry forward for up to five years.
For employees, this is one of the simplest giving decisions they will ever make. For employers, it is an easy benefit to promote: it costs the company nothing to share, and it gives employees a meaningful way to support education in their own community or anywhere in the country.
Two points keep the message accurate:
- The employee gives first, and the credit follows at filing. A gift made in 2027 is claimed on the 2027 return, filed in early 2028.
- The credit has a limit, but giving doesn’t. Employees can give more than the credit amount. Anything above the credit amount is treated like any other charitable contribution, subject to the usual tax rules.
That second point matters. A workplace campaign that only says “give $1,700” can accidentally tell employees where to stop. A better message is that the credit makes the first gift easy, and many employees will want to go further.
Track Two: The Company Gives as a Company
A company can also give directly to a Scholarship Granting Organization (SGO). That gift does not earn the EFTC, but it is a regular corporate charitable contribution, and it has no connection to the credit limits at all. A company can give $25,000, $250,000 or more.
Corporate charitable deductions changed starting in 2026. Corporations can now deduct charitable gifts only to the extent they exceed 1% of taxable income, and the existing 10% ceiling still applies. Contributions over the ceiling can generally be carried forward for up to five years. Your finance team or tax advisor can tell you how these limits affect your plans.
Be the First to Know
Get notified when the Education Freedom Tax Credit launches so you don’t miss the opportunity to support K–12 students while benefiting from a federal tax credit.
Company dollars usually flow through one of three structures:
- A direct corporate gift to an SGO, often tied to a community or education priority.
- A matching gift program that matches employee donations, doubling the impact of each gift.
- Sponsorship of a workplace campaign, where the company covers promotion and recognition while employees give.
A note on matching: when a company matches an employee’s gift, the match is the company’s own charitable contribution. It does not earn the employee a larger credit, and it does not earn the company a credit. Employees should understand that their credit is based only on their own cash gift, and anyone with questions about how a match applies to them should talk with their tax advisor.
What Workplace Giving Can Add Up To
Workplace campaigns work because small decisions add up. If 50 employees each give $1,700, that is $85,000 for scholarships. If the company matches those gifts, it becomes $170,000.
Employees can also give more. Give $1,700 as an individual or $3,400 as a married couple filing jointly, and the credit covers the full gift. Give more than that, and you receive the same credit, while every extra dollar helps more students.
How to Build a Corporate Giving Program for K-12 Scholarships
You don’t need a large foundation or a dedicated giving team to start. Most programs come together in a few steps.
- Pick a partner SGO. Donations must go to a SGO on a participating state’s list. A national SGO such as AFC Scholarship Fund can accept gifts from employees in any state.
- Decide what the company will contribute. That could be a match, a direct gift, a campaign sponsorship or simply communication support.
- Plan the timing. Only gifts made on or after January 1, 2027, earn the credit. A January campaign kickoff lets employees give early and plan for the full year.
- Communicate the mechanism correctly. Employees give first, and the credit follows when they file. Encourage employees to confirm their own situation with a tax professional.
- Make giving easy. Share a direct donation link, host a short information session and follow up with reminders during benefits season and at year-end.
- Share the results. Report how many students your campaign helped support. Impact stories keep participation strong year after year.
What About Payroll Giving?
Payroll deduction is a natural fit for workplace giving, and cash gifts made through payroll can qualify for the credit. The challenge is practical: many payroll providers and HR systems are still building the tools to route contributions to SGOs and document them correctly. Until those tools are in place, recurring gifts made directly by the employee are the simplest option. AFC Scholarship Fund’s article on recurring giving as a payroll alternative walks through how that works.
Why Employers Are Getting Involved
For many employers, supporting K-12 scholarships connects directly to their workforce and their communities:
- Talent pipelines. Strong schools prepare the next generation of employees.
- Employee engagement. Giving programs that cost employees little and help children directly tend to see strong participation.
- Community reputation. Supporting families’ ability to choose the school that fits their child is a visible, local commitment.
- Employee families. Many employees are parents themselves, and approximately 90% of American students are eligible to receive a scholarship funded through the credit.
No. The credit is available only to individual taxpayers. A company's gift to an SGO is a regular corporate charitable contribution.
No. An employee's credit is based on their own cash contribution. The company match is the company's own charitable gift.
The credit limits don't apply to company gifts. Corporate charitable deductions are subject to a 1% floor and a 10% ceiling based on taxable income, starting in 2026.
Yes. The credit covers up to $1,700 for individuals, or up to $3,400 for married couples filing jointly, and anything above that is treated like any other charitable contribution under the usual tax rules.
Yes. Donors in any state can claim the federal credit by giving to an SGO on a participating state's list.
