Two families can teach the same curriculum at the same kitchen table and reach different answers about whether a federal scholarship can pay for it. The reason sits in one cross-reference buried in the tax code, and Treasury has now confirmed it in writing.
In Alaska, a family that registers its home education as a private school will likely be able to spend a federal scholarship. A family down the road that files under the state’s parental home-education exemption likely will not. Same curriculum. Same kitchen table. Different paragraph of state law.
Here is the short answer for homeschool families: under the Education Freedom Tax Credit (EFTC), nearly every K-12 child can be an eligible student, but whether a scholarship can actually pay for home education depends on whether your state’s own law treats the home as a school. That is not a technicality waiting to be smoothed over. On June 10, 2026, the Treasury Department said so in writing.
What Treasury Confirmed in June
Treasury released a preview of its forthcoming guidance on Section 25F, the section of the Internal Revenue Code that creates the federal scholarship credit. The preview said the department expects to define “school” the way an existing education-savings statute does: public, private and religious schools providing elementary or secondary education as determined under state law.
Then came the sentence homeschool families should read twice. “Accordingly, a home school would be treated as a school if it is treated as a school under State law.”
Read plainly, that means Washington has declined to answer the question. It has handed the question to 50 state legislatures and their existing statutes.
Two Tests, and the Gap Between Them
To see why this happens, it helps to know that Section 25F asks two separate questions, not one.
The first question is who counts as an eligible student. A child generally qualifies if household income is at or below 300% of the area median income and the child is eligible to enroll in a public elementary or secondary school. Home-educated children clear that bar without difficulty.
The second question is narrower: what counts as a qualified expense. Section 25F does not define that term itself. It points to another part of the tax code, Section 530, the rulebook written for Coverdell Education Savings Accounts.
Section 530 ties qualifying expenses to enrollment or attendance at a public, private or religious school, and defines “school” by reference to state law. There is no separate homeschool category anywhere in it.
So a child can be fully eligible and still have no qualifying expense to spend a scholarship on. Eligibility and usability are two different things, and the law keeps them in two different places.
Why the Fix Congress Wrote for College Savings Didn’t Reach K-12
The most telling detail is what the same 2025 law did elsewhere. It amended the Section 529 college-savings rules to cover homeschool expenses by name.
Section 530 received no comparable change. Section 25F points to Section 530.
That asymmetry is why anyone reading the headlines and concluding “the new law covers homeschoolers” may be reading the wrong section. It is also why Treasury’s preview did not resolve the issue: a regulation cannot rewrite the statute’s cross-reference.
The Map Is Not Split Down the Middle
There are many different examples of this distinction across the country. Texas has treated a home school as a private school since a 1994 state Supreme Court ruling.
Arizona’s statute defines a homeschool as a nonpublic school. Virginia’s statute goes the other direction, providing that parent-led home instruction shall not be classified or defined as a private school.
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None of those legislatures were thinking about a federal tax credit when they wrote those words. The credit did not exist yet.
The Finding Most Families Have Never Been Told
Many states allow a family to home-educate either by operating as a private school or by filing under a standalone home-education statute. The first pathway will likely support a qualifying expense. The second likely will not.
Most families made that choice years ago for reasons of paperwork, privacy or convenience. Until this year, no one had reason to ask whether it carried a federal consequence.
Which raises a fairness problem worth naming. Some scholarship organizations have already begun telling homeschool families there is no homeschool exclusion, an assurance Treasury’s own preview does not support. For a family that plans a school year around money it cannot legally spend, that is not a rounding error.
What This Means for Your Family Right Now
No one needs to make a decision this month. The credit is not yet effective, and donations that may qualify cannot be made before January 1, 2027.
What is worth doing now is finding out how your own state classifies home education, and under which provision your family currently files. That single fact will shape almost everything else.
It is also worth understanding that hybrid arrangements may matter. A home-educated student who also enrolls part time in a co-op or microschool that qualifies as a private school under state law may have a qualifying expense through that enrollment, though Treasury has not yet issued the guidance that would confirm how such costs are treated.
And a broader point holds for every family reading this: eligibility for a scholarship never guarantees an award. Scholarship Granting Organizations, the nonprofits that receive donations and award scholarships, make those decisions under their own policies and the applicable rules.
Two Ways the Gap Could Close, Neither Automatic
The first is state legislation. A state that routes home education through a non-school category could amend its definitions, as 15 states already effectively have. That is 50 separate conversations, on 50 separate calendars.
The second is federal guidance. Treasury has said its main Section 25F regulations are expected by late September 2026, with separate guidance on qualifying expenses to follow. That later workstream is where hybrid and part-time enrollment questions would likely be addressed.
Until one of those happens, the sentence “every child is eligible” stays true in the narrow legal sense and incomplete in the way families actually experience it.
Here is what to watch between now and January: the text of Treasury’s final regulations, the follow-on expense guidance, and any bill in your state that touches the definition of a school.
Where AFC Scholarship Fund Fits
Under the law, a donor first makes a charitable contribution to a qualified Scholarship Granting Organization (SGO), and may then claim a dollar-for-dollar federal tax credit of up to $1,700 when filing.
Our commitment on this particular question is narrow and specific: we will help guide homeschool families what their state’s law appears to say, including when the answer is unfavorable or unclear, rather than what would be easier to hear.
If you want to follow how this develops, start with our homeschool eligibility and state law explainer and our summary of what Treasury has said so far. Sign up for updates to find out what changes in your state, and what it may mean for your family.
A home-educated child can be an eligible student under Section 25F if the income and public-school-enrollment-eligibility tests are met. Whether a scholarship can pay for home education is a separate question that depends on whether state law treats the home as a school.
Look at the statute your family files under, not the general reputation of your state's homeschool rules. Some states define a home school as a nonpublic or private school; others place home instruction in a separate category and specify that it is not a school.
Possibly. If the co-op or microschool qualifies as a private school under state law, enrollment there may produce a qualifying expense, but Treasury has not yet issued the guidance addressing which expenses count.
Treasury's main Section 25F regulations are expected by late September 2026, with separate expense guidance to follow. Treasury has said it expects to follow the statute's reference to state law, so a broad federal fix would likely require action by Congress or by individual state legislatures.
The credit is not yet effective. Qualified contributions to a Scholarship Granting Organization cannot be made before January 1, 2027, and the credit is claimed later, at tax filing.
