Federal Tax Credit for
Scholarship Contributions
The Federal Scholarship Tax Credit (FSTC) is the first school choice initiative that has passed at the national level, making it a true milestone for education freedom. The FSTC creates a dollar-for-dollar federal tax credit for donations to groups 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 Scholarship Tax Credit Updates
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 filer is $1,700 per year, and $3,400 for married couples filing jointly. The U.S. Treasury Department will oversee the federal tax credits.
What the tax credit could mean for you: Starting in 2027, as an individual taxpayer – at no additional cost – you could supercharge your giving by directing up to $1,700 of what you owe the IRS to a qualified SGO in exchange for a 100% dollar for dollar credit on your federal income taxes.
For example, a taxpayer who owes $10,000 to the IRS could make a $1,700 gift to an SGO, reducing their tax liability owed to the IRS to $8,300. Married couples that owe $10,000 to the IRS could make a $3,400 gift to an SGO, reducing their tax liability to $6,600. These donations, otherwise owed to the IRS, would fund scholarships, launch futures, and change lives.
State Opt-In: Additionally, states will have to opt-in and provide a list of qualified scholarship granting organizations (SGOs) eligible for donations to the U.S. Treasury Department. Individuals in any state will be able to give to qualified SGOs and get a dollar-for-dollar federal tax credit of up to $1,700 ($3,400 for marries couples), but the SGO will only be able to use the contribution for scholarships in a state that has opted in.
In summary: This tax credit will be a major boost for education freedom, permanently increasing the funds available for organizations like CSF and our partner programs across the country to award scholarships, giving many more parents a choice and children a chance.
Questions?: Check out our FAQs for more information or please email Darla Romfo, President and CEO, or Michele Mitola, Vice President of Strategic Planning and Development, if you have any questions about the federal tax credit and what it could mean for you and your charitable giving.