Start With the Education Freedom Tax Credit. Then Go Further

Most people don’t think of themselves as philanthropists. The word sounds like it belongs to someone with a building or monument named after them.

Starting January 1, 2027, that changes.

That’s when Education Freedom Tax Credit (EFTC) gives nearly every taxpayer a simple way to fund K-12 scholarships as “philanthropists”, and for many families it will be the first scholarship gift they’ve ever made.

Here’s how to make your first gift, turn it into a habit and keep going.

How to Become a Philanthropist, Starting With One Gift

Here’s how it works. Give to a qualified Scholarship Granting Organization (SGO), like AFC Scholarship Fund, 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.

A few rules from the Treasury Department’s October 2026 guidance are worth knowing:

• Cash gifts qualify. That includes check, bank transfer and card payments.
• Married couples can give together. Each spouse can contribute up to $1,700, for a combined credit of up to $3,400 on a joint return.
• The credit is nonrefundable. If your credit is larger than your tax bill, you can carry the unused amount forward for up to five years.
• Your Social Security number stays private. Your SGO gives you a written acknowledgment with a unique donor number.

Gifts made on or after January 1, 2027, are claimed on your 2027 federal return. Every household is different, so talk with your tax advisor about how this applies to you.

Step 1: Make Your First Gift

Start with the students you care about. AFC Scholarship Fund has funds for Catholic, Christian and Jewish schools, students with disabilities, military-connected families and students pursuing skilled trades, plus a general fund for students in any state or school type.

Pick the one that fits your values. Then give.

For your first gift, the math is simple:

• Give $1,700 as an individual, and the credit covers your full gift.
• Give $3,400 as a married couple filing jointly, and the credit covers your full gift.

That’s real money for a real student. Because SGOs must spend at least 90% of their income on scholarships, a $1,700 gift supports at least $1,530 in scholarships.

Step 2: Make It a Monthly Habit

The easiest way to give back is to stop thinking of it as a one-time decision.

Monthly giving spreads your gift across the year. A $1,700 gift works out to about $142 a month, or roughly $65 every two weeks. For a married couple giving $3,400, it’s about $283 a month. Every cash gift you make in 2027 counts toward that year’s credit.

A recurring donation also does something a single gift can’t. It keeps you connected to the students you’re supporting, and it makes giving more feel like the natural next step.

Paycheck giving isn’t widely available yet, but recurring gifts made directly are the simplest option today. Our article on recurring giving as a payroll alternative explains how it works.

Step 3: Give Beyond the Credit

Here’s what much of the industry is missing. The $1,700 limit applies to the credit. It doesn’t apply to your generosity.

Give more, say $5,000, $10,000 or $50,000, and you receive the same credit. The amount above it is treated like any other charitable contribution under the usual tax rules. What changes is how many children your gift reaches.

At our illustrative scholarship of $5,000, a $5,000 gift comes close to covering one student’s full school year. A $50,000 gift can help about nine students. You can see what each level can do in The Education Freedom Tax Credit Starts at $1,700. Your Impact Doesn’t Stop There.

If you’re planning a larger gift, our article on how the credit works for gifts of any size covers what happens to the amount above the credit. Your tax advisor can help you decide what fits.

Step 4: Bring Others With You

Some of the best ways to give back to the community start with one conversation.

• Give as a family. Talk with your kids about why you give and let them help choose a fund. Family giving is one of the simplest ways to pass the habit on.
• Start a giving circle. Friends, neighbors or members of your congregation can each give on their own and pick a fund together. Each person who gives can claim their own credit.
• Ask your employer. Some companies match employee gifts or run workplace campaigns. Our guide to corporate and workplace giving shows how that works.

When more people give, more students get a scholarship. That’s how one gift turns into a movement.

Step 5: Stay Close to the Impact

Knowing where your money goes makes it easier to keep giving. The rules include protections that help:

• At least 90% goes to scholarships. Federal law sets that minimum for every qualified SGO.
• Tax-credit gifts are kept separate. SGOs must keep qualified contributions separate from other funds.
• SGOs are audited. They’re subject to annual reporting and audits.
• Awards are made by the SGO. You choose a fund or community. Federal law doesn’t allow a gift to be directed to a specific child.

To see each step, read what happens to your donation after you give to an SGO. Then read the stories of families whose kids found the right school. That’s the part that keeps most donors coming back.