This is the page to forward to a school parent list, a congregation email chain, or a community group text. No tax jargon, just the questions people actually ask about the new Education Freedom Tax Credit (EFTC).
What is it?
Starting in 2027, the federal government will return up to $1,700 (Treasury rules pending) of your own federal income tax, dollar for dollar, when you donate to a qualified Scholarship Granting Organization (SGO). This is a credit, not a deduction. A deduction saves you a fraction of what you gave. A credit gives you back the full amount. Donate $1,700, and your federal tax bill drops by $1,700. The money funds a scholarship for a child in your community, and the gift is designed to cost the donor nothing in the end, once the credit is claimed.
When does it start?
Donations begin counting on January 1, 2027. Donors claim the credit when filing their 2027 federal return, in early 2028. A gift made before January 1, 2027 does not qualify for this particular credit.
Who qualifies to give?
Almost any taxpayer. You don’t need to itemize your taxes, you don’t need a high income, and you don’t need children in school. You do need some federal income tax liability to offset, since the credit reduces what you owe rather than arriving as a check. Note that this is a separate question from who qualifies to receive a scholarship, which depends on household income and is decided by the SGO.
Does my state matter?
Yes. Each state’s governor decides whether to participate, and scholarships only reach families in states that have opted in. Even if your own state hasn’t opted in yet, you can still donate to a qualified SGO in a participating state and claim the credit; your gift will support a student there. See where things currently stand across the country.
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.
How do I actually do it?
Four steps. Find a qualified SGO, such as AFC Scholarship Fund, serving a participating state. Give any cash amount, up to $1,700, on or after January 1, 2027. Keep the written acknowledgment and donor number the SGO sends you; that number is how the IRS matches your gift to your credit, and it means you never hand the SGO your Social Security number. Claim the credit on your federal return for that tax year.
Can I support my own school or community?
Often, yes, at the school level. Many SGOs let donors direct a gift toward a specific partner school’s scholarship fund, so a community’s giving can support that community’s families. What no donor can do, under any circumstances, is direct a gift to a specific student, including their own child. The law is strict on this point: the SGO always decides which eligible students receive awards.
What’s the honest fine print?
Three things. The credit offsets tax you owe; it is not a refund check on its own, though any unused amount carries forward for up to five years. A donation credited under this program cannot also be claimed as a separate charitable deduction. And if your state offers its own scholarship tax credit for the same gift, your federal credit is reduced accordingly, so you are not credited twice for one dollar.
A credit, which is the whole point. A deduction lowers the income you’re taxed on, saving you a fraction of what you gave. This credit lowers your actual tax bill by the full amount of your gift, up to $1,700.
No. Any cash amount qualifies. $1,700 is simply the most you can claim in a year.
No. The law does not allow a donor to direct a gift to a named student, including their own child. You may be able to direct a gift toward a specific partner school’s scholarship fund, but the SGO always decides which eligible students receive awards.
This article is for informational and educational purposes only and does not constitute tax, legal, or financial advice. Tax laws are subject to change. Please consult a qualified tax professional regarding your individual circumstances. The Education Freedom Tax Credit is effective January 1, 2027.
