Key Provisions & Impact
There is a new federal tax credit scholarship program that was signed into law in July 2025. These provisions are now permanently part of the U.S. tax code (section 25F of the Internal Revenue Code). In November 2025, the Departments of Treasury and IRS issued Notice 2025-70 request for comments, to which IIEC submitted public comment in December with over 50 organizations signing on. On December 12, States became able to opt-in after Revenue Procedure 2026-6 was issued. This historic, first of its kind law provides a federal income tax credit for individuals who contribute to scholarship granting organizations (SGOs). These SGOs provide scholarships for eligible students in private and public elementary and secondary schools to access educational opportunities that best meet their needs.
This site is your resource for understanding how the tax credit works.
Key Provisions
- A 100% non-refundable credit against individual federal income taxes up to $1,700 annually for donations to qualified scholarship granting organizations (SGOs).
- SGOs may award scholarships to students from households with up to 300 percent of median family income for each metropolitan and non-metropolitan region.
- Scholarship amounts are provided at the discretion of the SGO.
- The scholarships can be used for tuition, tutoring, special needs services, books, computer software, education supplies, and other qualified education expenses as allowed by existing Coverdell Savings Accounts under federal law.
Next Steps
This federal tax credit scholarship program will go into effect on January 1, 2027. The U.S. Department of the Treasury is currently in the process of writing regulations for these tax provisions.