Federal Scholarship Tax Credit Program Gains State Participation
July 14, 2026
Quick Summary
Beginning January 1, 2027, eligible individual taxpayers may claim a federal tax credit of up to $1,700 for qualifying cash contributions to approved Scholarship Granting Organizations in participating states.
What Is the Federal Scholarship Tax Credit?
The IRS recently announced that 27 states have elected to participate in the new Federal Scholarship Tax Credit program. Created under the One Big Beautiful Bill, the program is designed to encourage charitable contributions that help provide educational opportunities for elementary and secondary school students.
Beginning in 2027, eligible individual taxpayers may receive a federal tax credit of up to $1,700 each year for qualified cash contributions to an approved Scholarship Granting Organization, commonly referred to as an SGO. These organizations use eligible donations to provide scholarships for qualified educational expenses.
How Taxpayers Can Qualify
State participation in the program is voluntary. To qualify for the credit, a taxpayer must contribute to an approved SGO in a state that has formally elected to participate and submitted its list of eligible organizations to the IRS.
Participating States
The 27 participating states currently include Alabama, Alaska, Arkansas, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Louisiana, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming.
What Happens Next
Additional states may choose to participate as they complete the required election and submission process. The IRS will continue updating its official list of participating states and approved Scholarship Granting Organizations.
Taxpayers interested in claiming the credit should confirm that their state and selected organization meet all IRS requirements before making a contribution. They should also consult a qualified tax professional regarding their eligibility and individual tax situation.
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