Most of the coverage of the Education Freedom Tax Credit (EFTC) focuses on which governors have opted in, which states are still deciding, and what a future Congress might do to the program. That debate matters. But it answers a different question than the one that will determine whether scholarships reach kids.
Politics decides whether the credit is available in each state. It does not decide whether families and donors use it once it is. And history suggests that even a generous, dollar-for-dollar benefit can go unclaimed if claiming it feels complicated.
Free money, historically, rarely claims itself. Employers have offered 401(k) matching contributions for decades, adjusting auto-enrollment rules again and again to close the gap, yet a meaningful share of workers still leave employer matches unclaimed simply because the mechanics feel unclear or inconvenient.
The EFTC works on the same principle, which is why explaining it clearly matters as much as the credit itself. It costs nothing net, but “costs nothing” has never been enough on its own to guarantee that people take advantage of a benefit built for them. Understanding how the credit works, step by step, is what turns a good policy into a scholarship a family can actually use.
For the EFTC, the sequence itself is simple: a taxpayer donates to a qualified Scholarship Granting Organization (SGO), receives a dollar-for-dollar federal tax credit of up to $1,700 (Treasury rules pending), and that credit reduces what they owe the IRS. The donation comes first. The credit follows. But “simple” and “well understood” are not the same thing, and four specific frictions can get in the way of a taxpayer completing that sequence.
Awareness
Many people simply haven’t heard of the credit yet or assume it applies only to private-school families. It doesn’t. Any taxpayer with federal income tax liability can claim it by donating to a qualified SGO.
Paperwork and Trust
New tax provisions can feel like new ways to make a mistake. A well-run SGO answers this directly: donors receive a written acknowledgment and a unique donor number rather than having to hand over sensitive information, and a transparent, audited organization earns the trust a first-time donor needs. AFC Scholarship Fund is built to be that kind of organization, with the audited, accountable track record donors can check for themselves.
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.
Cash-Flow Timing
A donor who gives in January 2027 might assume they have to wait until they file their 2027 return in early 2028 to see the benefit. They don’t have to. Because the credit is earned in the year the gift is made, a donor can adjust their federal withholding to recover the benefit across their 2027 paychecks instead of waiting for a refund.
The Five-Year Carryforward
A donor whose credit exceeds their tax bill for the year doesn’t lose the difference. It carries forward for up to five years.
None of these frictions are permanent. Each one has a fix, and nearly every fix lives at the level of the organization asking for the gift. That is where families are educated on how the credit works, where the paperwork is either simple or intimidating, and where trust is either earned or lost.
What this means for you
If you’re a donor, the credit is likely available to you, and the wait people worry about is largely avoidable. If you’re a family, the same principle applies to the giving conversation in your community: an SGO you trust, like AFC Scholarship Fund, is what turns “I heard about that tax thing” into a completed donation and a scholarship for a child.
Politics decides whether a state participates. It does not decide whether the families and donors in that state actually complete the donate-then-credit process once the program is live. That second question is about participation, not politics, and it is where the real work of an SGO happens.
The same reasons people leave an employer 401(k) match unclaimed or skip a costless tax provision: they don’t know it exists, the process feels uncertain, or the timing feels inconvenient. None of these relate to the size of the benefit. They relate to friction, and friction can be removed.
Working with a scholarship granting organization that makes giving straightforward: clear communication, a simple donation process, prompt documentation, and information about options like adjusting withholding so donors don’t feel like they’re waiting a year to see the benefit.
