How much is the Federal Scholarship Tax Credit?

Eligible donors may claim a non-refundable credit of up to $1,700 per year against their federal individual income taxes for contributions to qualified Scholarship Granting Organizations. There is no income cap for donors and no aggregate cap on participation.

Federal Scholarship Tax Credit (FSTC): How It Works

Q: How does the FSTC tax credit work?

Individual donors contribute to qualified Scholarship Granting Organizations (SGOs). In return, they receive a dollar-for-dollar federal tax credit of up to $1,700. SGOs then award scholarships to eligible K–12 students for qualified educational expenses.

Q: When does the FSTC program start?

Donations become eligible for the Federal Scholarship Tax Credit starting January 1, 2027. Credits can be claimed when taxpayers file their 2027 returns in 2028.

Q: What can FSTC scholarships be used for?

FSTC scholarships can be used for tuition and fees, academic tutoring, special needs services, books, supplies, transportation, internet access, test prep courses, exam fees, and more.

Federal Scholarship Tax Credit

The Federal Scholarship Tax Credit (FSTC) — creates the nation’s first federal scholarship tax credit, allowing individuals to claim a dollar-for-dollar federal tax credit of up to $1,700 per year for contributions to scholarship-granting organizations (SGOs) that fund K–12 educational scholarships for eligible students.

The program is not limited to private school tuition. Families can use scholarships for tutoring, test prep, special-needs services, internet access, and more — including for students attending public schools.

Learn More

$1,700

PER TAXPAYER

Uncapped, dollar-for-dollar federal tax credit for contributions to qualified Scholarship Granting Organizations (SGOs).

No Cap

ON PARTICIPATION

Any individual who owes federal income taxes can claim the credit — no aggregate limit.

50 states + DC

ELIGIBLE TO OPT IN

The program is available nationwide, with each state’s governor electing to participate.

300%

of area median income

Students from households earning up to 300% of AMI are eligible — covering approximately 85–90% of K–12 students nationwide.

Billions

OF DOLLARS

go to the treasury & do not fund education if governors DO NOT opt in.

COST TO STATE BUDGETS

Funded entirely by voluntary private donations, with no impact on state general funds.

How FSTC Works

State Opts In

The Governor (or designee) elects to participate and submits a list of qualified SGOs to the U.S. Treasury.

Taxpayer Contributes

An individual makes a cash contribution of up to $1,700 to a qualified SGO on the state’s list.

SGO Awards Scholarships

The SGO uses donations to provide scholarships to eligible K–12 students for qualified education expenses.

Taxpayer Claims Credit

When filing their federal return, the taxpayer receives a dollar-for-dollar credit of up to $1,700 against their federal tax liability.

Program Timeline

July 4, 2025

FSTC ENACTED

Signed into law as part of the One Big Beautiful Bill Act.

September 2026

Treasury Guidance

Treasury expected to publish draft rules

December 2026

Rules Finalized

Rules expected to be finalized

Jan. 1, 2027

PROGRAM LAUNCHES

Donations to qualified SGOs become eligible for the federal tax credit.

2028

CREDITS CLAIMED

Taxpayers file 2027 returns and claim credits for 2027 donations.

July 4, 2025

FSTC ENACTED

Signed into law as part of the One Big Beautiful Bill Act.

September 2026

Treasury Guidance

Treasury expected to publish draft rules

December 2026

Rules Finalized

Rules expected to be finalized

Jan. 1, 2027

PROGRAM LAUNCHES

Donations to qualified SGOs become eligible for the federal tax credit.

2028

CREDITS CLAIMED

Taxpayers file 2027 returns and claim credits for 2027 donations.

Why Governors Should Opt In

This is a no-brainer for your state — and for your students.

ZERO COST TO STATE BUDGETS

FSTC requires no state spending and has no impact on your state’s general fund. Scholarships are funded entirely by voluntary private donations.

CAPTURE FEDERAL RESOURCES OR LOSE THEM

If your state doesn’t opt in, your residents’ first $1,700 in federal taxes flows to the U.S. Treasury general fund or to SGOs in other states.

PUBLIC SCHOOL STUDENTS BENEFIT TOO

Scholarships can fund tutoring, test prep, special-needs services, internet access, and more — including for students in public schools.

VOTERS SUPPORT IT

64% of voters nationally — including 61% of Democrats, 63% of Black voters, and 68% of Hispanic voters — support their governor opting in.

OPPORTUNITY FOR LEADERSHIP

Governors who opt in can shape how FSTC works in their state, support working families, and show they put students above partisan politics.

FSTC FAQ's

General

How does the tax credit work? +

Individual donors contribute to qualified SGOs. In return, they receive a dollar-for-dollar federal tax credit of up to $1,700. SGOs then award scholarships to eligible K–12 students for qualified educational expenses.

When does the program start? +

Donations become eligible for the tax credit starting January 1, 2027. Credits can be claimed when taxpayers file their 2027 returns in 2028.

FOR FAMILIES

Who qualifies for a scholarship? +

Students from households earning up to 300% of the area median gross income are eligible. This covers approximately 85–90% of K–12 students nationwide.

What can scholarships be used for? +

Scholarships can be used for tuition and fees, academic tutoring, special needs services, books, supplies, transportation, internet access, test prep courses, exam fees, and more.

FOR DONORS

What is the donor benefit? +

Donors receive a dollar-for-dollar, non-refundable federal tax credit of up to $1,700 per year. Unused credits may be carried forward for up to 5 years.

FOR TAX PROFESSIONALS

How much is the credit? +

Eligible donors may claim a non-refundable credit of up to $1,700 per year against their federal individual income taxes for contributions to qualified SGOs.