Tennessee already had a state scholarship program. It excluded families who teach their children at home. A law signed on May 5, 2026, opens a second, federal path that does not.
Tennessee spent 2025 building a scholarship program that homeschool families could not use. In 2026, it built a second one they can.
On May 5, 2026, Gov. Bill Lee signed SB 2206, the Federal Tax Credit Scholarship Act, which became Public Chapter 720. The law directs Tennessee’s Department of Education to join the federal Education Freedom Tax Credit (EFTC), and approve the nonprofits that will award the scholarships and send that list to the U.S. Treasury Department.
The provision drawing the most attention is quieter than any of that. The scholarships funded through this new channel may cover homeschool expenses. Tennessee’s own state-funded program, passed a year earlier, does not.
Here is why that distinction matters far beyond Tennessee.
What the New Tennessee Law Actually Does
Start with the federal program underneath it. The EFTC, written into the tax code as Section 25F, allows an eligible taxpayer who gives a cash donation to an approved scholarship nonprofit called a Scholarship Granting Organization (SGO) to later claim a dollar-for-dollar federal tax credit of up to $1,700 when filing.
The sequence matters: the gift comes first, and the credit is claimed afterward, at filing.
Congress made the program voluntary for states. A state has to elect in, and someone in state government has to decide which SGOs are eligible to serve its families.
Public Chapter 720 answers both questions for Tennessee. It instructs the commissioner of the Department of Education to make the state’s election, certify eligible scholarship organizations, submit that list to the secretary of the treasury and publish it on the department’s website.
The act takes effect for taxable years beginning after December 31, 2026. That lines up with the federal program’s January 1, 2027 start.
How It Passed, and Who Voted Against It
The bill was carried by Sen. Jack Johnson, a Republican representing District 27. It cleared the Senate 27-5 on March 19 and the House 75-19 on March 30 before reaching the governor’s desk.
Those margins are worth pausing on. Roughly one in five House members voted no, and the debate over the federal credit in Tennessee, as in most states, has not been quiet.
Supporters argued the state loses nothing by participating, since the credit draws on federal tax liability rather than state appropriations. Tennessee’s Fiscal Review Committee classified the bill’s fiscal impact as not significant, finding the department could absorb the work with existing staff.
Opponents of federal scholarship tax credits generally have raised concerns about oversight of participating schools and about the long-term direction of public education funding. Those arguments did not carry the vote here, but they have shaped the debate in other statehouses.
Tennessee appears on the IRS roster of participating states published June 8, 2026.
Why the Homeschool Provision Is the Real Story
Tennessee passed the Education Freedom Scholarship Act in 2025, a state-funded program that excludes homeschool expenses. Families teaching children at home were outside it.
Public Chapter 720 builds a different channel. Its scholarships cover qualified elementary and secondary expenses, and the bill’s fiscal note states that this includes homeschool expenses, as federal law permits.
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.
So a Tennessee family that could not access the state program in 2025 may be able to access a federally funded scholarship in 2027. Same state, same family, two different answers.
That is not unique just to Tennessee. Because eligible expenses under Section 25F are defined at the federal level, the credit can reach families in categories that individual state programs have chosen not to cover.
The practical effect is that in some states the federal credit is not a duplicate of what already exists. It is a wider door.
What Still Has to Happen Before Any Money Moves
An enabling law is not a functioning program. Several steps sit between Public Chapter 720 and a scholarship reaching a student.
The Department of Education has to certify organizations. It has to submit that list to Treasury and publish it. Treasury has to finalize the regulations governing how the credit works, and until it does, key details remain unsettled.
Only then can qualifying nonprofits accept contributions that may generate the federal credit, beginning with the 2027 tax year.
No state has completed SGO certification yet, which is why the timeline, not the politics, is now the thing to watch in Tennessee. We covered why no state has certified SGOs yet in more detail.
What This Means If You Live in Tennessee
If you are a parent, the question to track is which organizations the Department of Education certifies, and whether any of them build programs designed with homeschool families in mind. The law permits it. Whether organizations do it is a separate decision.
If you are a taxpayer who may want to give, nothing is available yet. The credit is not effective before January 1, 2027, and no contribution made now qualifies.
When it does open, the mechanics work like this: you give to a certified scholarship organization, and you may claim a dollar-for-dollar federal tax credit of up to $1,700 against your federal income tax liability when you file. It is a credit, not a deduction. If you want the sequence spelled out plainly, see how the Education Freedom Tax Credit works, step by step.
And if you live somewhere else? Tennessee is one data point in a rollout still being written state by state. Whether the credit reaches your community depends on decisions being made in your own capitol.
What to Watch Next
Three things will tell you how Tennessee’s version of this program takes shape.
First, the certification timeline: how quickly the Department of Education names eligible organizations and publishes the list. Second, Treasury’s final rules, which will settle questions the statute leaves open. Third, whether any certified organization builds scholarships specifically for the homeschool families the 2025 state program excluded.
If you want to understand where your state stands and what the credit could mean for your family or your filing, find out more and get on our updates list.
The question in Tennessee is no longer whether the state participates. It is who administers the dollars, and who they reach.
This is a summary of a state law and a federal program that is still being written in regulation. It is not tax advice. Consult a qualified tax professional about your own situation.
Public Chapter 720 covers qualified elementary and secondary expenses, and the bill's fiscal note states this includes homeschool expenses, as federal law permits. Actual availability depends on which scholarship organizations the Department of Education certifies and what those organizations choose to fund.
Not yet. The law applies to taxable years beginning after December 31, 2026, matching the federal program's January 1, 2027 start. A donor would give to a certified scholarship organization first and claim the credit later, when filing. Treasury rules are still pending.
Yes. The 2025 Education Freedom Scholarship Act is a separate, state-funded program with its own rules, and it excludes homeschool expenses. Public Chapter 720 creates a separate federal channel and does not change the 2025 program.
The commissioner of the Department of Education certifies eligible Scholarship Granting Organizations, submits the list to the U.S. secretary of the treasury and publishes it on the department's website. As of publication, that certification has not been completed.
Tennessee appears on the IRS roster of participating states published June 8, 2026. Participation on paper is a separate step from having certified organizations that can accept contributions.
