Give $1,700 to a child’s school. Get all $1,700 back.
Starting in 2027, you can send up to $1,700 of the federal tax you already owe to a scholarship fund instead of to Washington. The whole amount comes off your tax bill. It costs you nothing.
You give
Up to $1,700
Per person, per year. $3,400 for a married couple filing jointly.
You get back
All of it
Every dollar comes off your federal tax bill. That is a credit, not a deduction.
It costs you
$0
You are moving tax money you already owe. You are not adding to your giving budget.
Where your money goes
Four steps out, one step back. The money leaves your bank account, pays for a child’s school, and comes back to you as a smaller tax bill.
You give
Up to $1,700 to a scholarship fund in your state. Card, bank transfer, or check.
It joins the pool
Your gift sits with every other donor's. You can name a school you'd like it to help.
Families apply
A scholarship committee reads the applications and decides which children get awarded.
The school gets paid
Tuition, books, tutoring — paid straight to the school or the vendor. Never cash to a family.
At tax time, you get every dollar back.
Then at tax time, you get every dollar back — the full amount comes off what you owe the IRS.
A credit is not a deduction
This is the part everyone gets wrong. A deduction gives you back a slice. A credit gives you back the whole thing.
Same $1,700 out the door — here’s what comes back
Giving $1,700 to a normal charity
$374 back
You get a deduction. It shaves a bit off the income you get taxed on.
Giving $1,700 to a scholarship fund
$1,700 back
You get a credit. It comes off the tax bill itself.
The deduction example uses the 22% federal bracket: a $1,700 write-off saves you $374. The credit hands back the entire $1,700 no matter what bracket you are in.
What it does to your tax bill
Say you give $1,700. Where you land depends on one thing: what you owed before you gave.
| Before you give | Your credit | After you give $1,700 |
|---|---|---|
You owe $2,000 when you file Typical if you are self-employed, or if not enough was taken out of your paychecks. | − $1,700 | You owe $300 Your bill shrinks by the full amount. |
You are already getting a $600 refund Your paychecks already paid your $5,000 tax bill for the year, so you were due $600 back. | − $1,700 | You get $2,300 back You already paid that tax in. The credit sends it back to you as a bigger check. |
Your whole tax bill for the year is $900 You can only cancel tax you actually owe — but the leftover credit is not thrown away. | − $900 this year | You owe $0 The other $800 carries forward. You claim it on a later return, within five years. |
You owed no federal tax at all Retired on untaxed income, or your income was low enough that your tax came to zero. | − $0 this year | Nothing changes yet There is no tax to cancel now, so all $1,700 carries forward — worth something only if you owe federal tax within five years. |
Before you give
You owe $2,000 when you file
Typical if you are self-employed, or if not enough was taken out of your paychecks.
− $1,700 credit
After you give $1,700
You owe $300
Your bill shrinks by the full amount.
Before you give
You are already getting a $600 refund
Your paychecks already paid your $5,000 tax bill for the year, so you were due $600 back.
− $1,700 credit
After you give $1,700
You get $2,300 back
You already paid that tax in. The credit sends it back to you as a bigger check.
Before you give
Your whole tax bill for the year is $900
You can only cancel tax you actually owe — but the leftover credit is not thrown away.
− $900 this year credit
After you give $1,700
You owe $0
The other $800 carries forward. You claim it on a later return, within five years.
Before you give
You owed no federal tax at all
Retired on untaxed income, or your income was low enough that your tax came to zero.
− $0 this year credit
After you give $1,700
Nothing changes yet
There is no tax to cancel now, so all $1,700 carries forward — worth something only if you owe federal tax within five years.
The pattern: the credit cancels federal tax you owe. If your paychecks already paid that tax, it comes back to you as a refund. If you owe less than you gave, the rest is not lost — it carries forward for up to five years. The only donor it does nothing for is one who will not owe federal tax in any of them.
You are voting with your tax dollars
That $1,700 was leaving your pocket either way. The only question is where it lands.
Do nothing and it goes to the U.S. Treasury, to be spent on whatever Washington decides. Send it to a scholarship fund and it pays for a child’s education in your state, at a school you would like to help.
Same money. Your call.
Why these funds exist
The law needs a middleman
You cannot hand $1,700 to a school and call it a credit. An approved nonprofit — a scholarship granting organization — pools the gifts and picks the students at arm's length. That is all an SGO is.
It brings the cost of school down
Tuition is the wall most families hit. Every gift in the pool is one more family that is not priced out of the school that fits their child.
It stays close to home
Money you designate to your state can only pay for students in your state, and most donors name a school in their own town. This is how people fund their own community.
Six rules, and that is the lot
Nothing else about this is complicated.
$1,700 each, every year. A married couple filing jointly can claim $3,400. Give more than your cap and the extra is simply a normal gift.
You have to owe the tax. The credit wipes out federal tax you owe — it does not pay you money you never owed. Credit above your bill is not lost, though: it carries forward for up to five years.
Cash only. Card, bank transfer, check, wire. Stock, crypto, and donor-advised fund grants do not count for this credit.
You can name a school. You cannot pick the child, and no fund may promise your money to one school — the committee decides. A preference guides it; it never binds it.
At least 90¢ of every dollar has to reach students. No more than 10% can go to running the fund, and that is watched state by state.
Scholarships go to families at or below 300% of the median income where they live — so the line is local, not one national number.
Questions people actually ask
Is this a credit or a deduction?
A credit, which is much better. A deduction takes a slice off the income you get taxed on. A credit comes off the tax itself. Give $1,700 and your federal tax bill drops by $1,700.
What if I owe less than $1,700 in federal tax?
Then you claim as much as you owe this year and the rest waits for you. The credit can bring your tax bill to zero but never sends you a refund beyond that — and what you cannot use carries forward for up to five years, so you still get every dollar, just spread across a few returns.
Do I have to itemize?
No. You can take the standard deduction and still claim this credit. You just cannot also write the same gift off as a charitable donation — it is one or the other.
When can I do this?
January 1, 2027, and only in states that have opted in. Our state tracker shows where your state stands. Some funds are taking pledges now so your gift can go through on the first day.
Can I say where my money goes?
You choose the fund and the state, and you can name a school you would like to help — most funds show that preference to their scholarship committee. You can never pick a particular child, and the fund keeps the final say. That is federal law, not a house rule.
What do I need at tax time?
A receipt from the fund showing the amount, the date, the state your gift was designated to, and a donor number that identifies you to the IRS without your Social Security number appearing anywhere. It lands in your inbox within moments of the gift. Keep it with your tax records.
The Education Freedom Tax Credit (EFTC), the Federal Scholarship Tax Credit (FSTC), the Educational Choice for Children Act (ECCA), and Section 25F are four names for the same federal program — a dollar-for-dollar tax credit of up to $1,700 per year for donations to scholarship granting organizations, effective January 1, 2027. Nothing here is tax advice — check your own return with your preparer.
Not ready to give today?
The credit is only worth something if you use it before the deadline. Join the donor list and we will remind you in time — and tell you the moment your state opens up. You can add your parents while you are here.
Join the donor listTalk it through before you decide.
Tell us about your organization and we’ll set up a consultation on your formation path, your state, and the timeline. It costs nothing and there is nothing to sign — and if it’s useful, we’ll walk through the platform on the same call.
What happens next
We read your submission and respond within one business day
A working session, typically 45–60 minutes — your situation, not a sales pitch
Which of the three paths fits, what your state requires, and what the timeline is
You leave with a clear recommendation — including when the answer is to join an SGO rather than form one, or to wait