Donor FAQ for the Federal Scholarship Tax Credit

What is the Federal Scholarship Tax Credit (FSTC)?

The FSTC, created by the Educational Choice for Children Act (ECCA), is a federal income tax credit that allows you to donate to K-12 scholarships and receive a dollar-for-dollar tax credit up to $1,700 per year. It became law on July 4, 2025, and takes effect January 1, 2027.

It’s also known as the Education Freedom Tax Credit.

How much can I donate and claim?

You can donate any amount, but the maximum federal tax credit is $1,700 per tax return (whether filing single or joint). Unused credits can be carried forward for up to 5 years.

Who can donate?

Any U.S. citizen or resident who pays federal income tax can donate and claim the credit. You don't need to itemize deductions—this is a direct credit against your tax liability.

Can businesses claim the credit?

No. The federal FSTC is only available to individual taxpayers. However, many states have separate corporate tax credit programs.

Can I choose which student receives my donation?

No. Federal law prohibits earmarking donations for specific students. Your contribution supports a pool of scholarships awarded by the Scholarship Granting Organization (SGO) based on eligibility criteria.

Can I claim both federal and state tax credits?

Yes! If your state has its own tax credit scholarship program, you can donate to both and claim both credits. Just make separate donations to each program—you cannot claim both credits for the same donation.

Example: A Georgia donor could contribute $5,000 to a Georgia state SGO (100% state credit) PLUS $1,700 to an ECCA SGO (100% federal credit) for a total of $6,700 in tax credits.

Do I have to donate to an SGO in my state?

For the federal FSTC, you can donate to any qualified SGO in any participating state. For state tax credits, you typically must donate to an SGO in your home state.

What if my state hasn't opted into ECCA?

You can still donate to an SGO in any participating state and claim the federal credit. Or, contact your governor's office to encourage your state to opt in.

What can scholarship recipients use the funds for?

Scholarships can cover:

• Private or religious school tuition
• Homeschool curriculum and materials
• Books, supplies, and technology
• Tutoring services
• Educational therapies (OT, PT, speech, behavioral therapy)
• Dual enrollment courses

Who qualifies to receive scholarships?

Students in families earning 300% or less of their area's median income who are eligible to enroll in public K-12 schools. Priority goes to students who received scholarships the previous year and their siblings.

When can I start donating?

SGOs can begin accepting donations for the 2027 tax year once their state opts in and they receive federal approval. The earliest anyone can claim the credit is on their 2027 tax return (filed in 2028).

How do I claim the credit on my taxes?

You'll claim the credit when filing your federal tax return using the form provided by the SGO. The credit is applied directly against your federal income tax liability.

Can I still deduct my donation as a charitable contribution?

No. You cannot claim both the FSTC tax credit AND a charitable deduction for the same donation. You must choose one or the other (the credit is almost always more valuable).

What's the deadline to donate?

To claim the credit for a given tax year, you must make your donation by December 31 of that year. Check with your specific SGO for any earlier deadlines they may have.

Where do I donate?

Find a qualified SGO in a participating state. Many SGOs offer online donation portals where you can contribute via credit card or ACH. The SGO will provide you with the necessary tax documentation.

How do I know my donation is going to legitimate scholarships?

All SGOs must:

• Be approved 501(c)(3) organizations
• Use at least 90% of donations for scholarships
• File annual reports with the IRS and U.S. Treasury
• Be listed on their state's approved SGO registry

Always verify an SGO is on your state's official approved list before donating.

What if I donate more than $1,700?

You'll only receive a tax credit for $1,700, but the full amount still supports students. Any amount above $1,700 may qualify as a charitable deduction (consult your tax advisor).

Can I donate and receive the credit every year?

Yes! There's no lifetime limit. You can donate up to $1,700 annually and claim the federal credit every tax year, plus participate in state programs if available.