FEDERAL SCHOLARSHIP TAX CREDIT (FSTC)

Beginning Jan. 1, 2027, individual taxpayers may be able to claim a Federal Scholarship Tax Credit (FSTC) for certain cash contributions up to $1,700 to Scholarship Granting Organizations (SGOs).

For the first time in history, the U.S. Congress has enacted a federal tax credit for individuals’ contributions to nonprofit organizations distributing K–12 education scholarships. Included in the sweeping One Big Beautiful Bill Act, the federal “Individual Tax Credit for Qualified Contributions to Scholarship Granting Organizations” (FTCS) represents a notable milestone in the decades-long effort to broaden educational opportunity for American families.

Signed into law in July 2025 and effective January 1, 2027, section 25F of the Internal Revenue Code will allow individual taxpayers to receive a dollar-for dollar federal income tax credit for donations made to Scholarship Granting Organizations (SGOs) that meet federal requirements.

Individuals can donate up to $1,700 and claim a dollar-for-dollar federal tax credit for that contribution. Married couples filing jointly can donate up to $3,400 and claim the credit. This was an important clarification in the new Treasury rules: Each spouse can qualify for the $1,700 credit. 

Importantly, unlike students who must live in a participating state to access a scholarship, donors throughout the U.S. may contribute to any qualified SGO, regardless in which state the donor or SGO is located.  

Those donations will provide the funding SGOs use to award scholarships to eligible students.