The Education Freedom Tax Credit, Explained

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.

Who uses which name:

• Education Freedom Tax Credit (EFTC) — the common public name. Treasury's own announcements, press coverage, and school-choice advocacy organizations use it.
• Federal Scholarship Tax Credit (FSTC) — the IRS's official label. IRS pages, forms guidance, and the participating-state list use this name.
• Educational Choice for Children Act (ECCA) — the congressional bill name for the legislation before it was enacted.
• Section 25F — the statutory citation: where the program lives in the Internal Revenue Code. Tax professionals and legal analysis cite it this way.

If you have read about any one of these, you have read about all of them. There is one credit, one set of rules, and one effective date.

The credit is a non-refundable federal income tax credit for individual taxpayers who donate cash to a state-approved Scholarship Granting Organization (SGO).

• Amount: up to $1,700 per taxpayer per year — $3,400 for married couples filing jointly.
• Dollar-for-dollar: the credit reduces federal taxes owed directly. A $1,700 contribution costs a qualifying donor $0 after the credit, in any tax bracket — unlike a deduction, whose value depends on the donor's marginal rate.
• Effective date: January 1, 2027. The first creditable donations happen in tax year 2027, claimed on returns filed in 2028.
• State opt-in: the credit is only available for contributions to SGOs approved by a state that has elected into the program. States elect annually.
• Where donors live doesn't matter: eligibility turns on where the SGO is listed and where the student resides — not the donor's home state. A donor in a non-participating state can contribute to an SGO listed in a participating state and claim the credit.

The money flows to K-12 scholarships for students whose household income is at or below 300% of area median gross income, covering tuition and other qualified educational expenses.

The program began in Congress as the Educational Choice for Children Act (ECCA). In 2025 its substance was enacted as part of the One Big Beautiful Bill Act (OBBBA), which codified the credit at Section 25F of the Internal Revenue Code.

After enactment, the IRS adopted Federal Scholarship Tax Credit (FSTC) as the program's official administrative label — that is the name on the IRS's program pages and its list of participating states. Meanwhile, Treasury announcements and most press coverage popularized Education Freedom Tax Credit (EFTC), which has become the name most people encounter first.

The result is a naming split that tracks the audience: advocacy and press say EFTC, the IRS says FSTC, Congress-watchers say ECCA, and tax professionals cite §25F. None of the names marks a different version of the program.

For everyday conversation and fundraising, Education Freedom Tax Credit is the name most donors and families will recognize. When you are working with IRS materials — the participating-state list, filing guidance, receipts — look for Federal Scholarship Tax Credit (FSTC). In legal documents, formation paperwork, and compliance analysis, the statutory cite Section 25F is the precise reference.

SGO Guide's reference content generally uses the statutory cite for precision, glossing the common names on each page. Whichever name you search, the rules are identical: the same $1,700 cap, the same state opt-in requirement, the same January 1, 2027 start.