Federal Education Freedom Tax Credit

SGO Services

There is cause for celebration! The federal Education Freedom Tax Credit (EFTC) for donations to scholarship granting organizations (SGOs) was included in the budget bill that was signed into law on July 4th, 2025. This is the first school choice legislation that has passed at the national level, making it a true milestone for education freedom.

The measure creates a dollar for dollar federal tax credit for donations to SGOs like Children’s Scholarship Fund (CSF) and CSF’s partner programs across the country, some of which already run state tax credit programs, including CSF New Hampshire, CSF Philadelphia, the Today and Tomorrow Educational Foundation in St. Louis, and ACE Scholarships, which administers tax credit programs in Arkansas, Kansas, Louisiana, and Montana.

Sign up for Federal Tax Credit Updates SGO Services

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What best describes your interest in the Education Freedom Tax Credit?

How did you hear about CSF?:

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How the tax credit would work: The new tax credit will take effect in 2027, and is permanent, with no date to expire. It also does not have an overall cap (so the tax credits will not “run out”). However, the maximum tax credit amount for each individual is $1,700 per year. The U.S. Treasury Department will oversee the federal tax credits.

What the tax credit could mean for your school or organization: Starting in 2027, individual taxpayers – at no additional cost – could supercharge your giving by directing up to $1,700 of what they owe the IRS to a qualified SGO in exchange for a 100% dollar for dollar credit on their federal income taxes. That money would fund scholarships that could be used by families who are part of your school or organization to pay for their children’s tuition, tutoring, transportation, or other educational expenses.

How CSF could work with your school or organization to implement the Education Freedom Tax Credit:

CSF can advise you on how to start your own SGO. For more information, see our Guide to Starting a Scholarship Granting Organization.
CSF can also partner with you and act as your SGO.
With CSF taking care of scholarship administration, donation processing/receipting, and compliance/reporting, you can focus on fundraising.
While CSF would process your tax credit gifts, you would remain in control of your donors and donations directed to your school or organization would be kept in a segregated account.
CSF has a proven track record of success. Since 1998, CSF and its partner programs have awarded scholarships worth more than $1.23 billion, changing the lives of 224,252 children.
CSF has received four stars (the highest rating possible) from Charity Navigator for its high standards of cost effectiveness, accountability, and transparency.
For three years running, CSF New Hampshire has been recognized by EdChoice for “most effective implementation” of a universal education choice program.

In summary: This tax credit has the potential to be a major boost for education freedom, permanently increasing funds available to award scholarships, giving many more parents a choice and children a chance.

Questions?: Please email Lesley Searcy, Vice President: Head of Federal Scholarship Tax Credit, or Amy Popadick, Director of Strategic Partnerships, if you have any questions about how your organization could raise funds and offer scholarships under the Education Freedom Tax Credit.

Please note that the information provided here is subject to change and not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited and any examples are for illustrative purposes only.