The federal Education Freedom Tax Credit and state-level tax credit scholarship programs are similar but not the same. The federal program offers a federal income tax credit up to $1,700 per tax return, while state programs vary widely in structure, credit amounts, and eligibility. 

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Donors can claim both federal and state credits (in participating states) by making separate contributions. This is a massive opportunity for donors to potentially receive up to $1,700 in a federal tax-credit on top of a state tax-credit.

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The Federal Tax Credit Program

The Educational Choice for Children Act passed July 4, 2025, creating America's first federal scholarship tax credit program. Key details include:

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• Jurisdiction: Nationwide for any state that opts in
• Tax Type: Federal income tax credit
• Credit Amount: Up to $1,700 per tax return (single or joint filing)
• Launch Date: January 1, 2027
• Cap: No federal cap on total credits issued
• State Participation: States must opt in; not automatic
• Oversight: U.S. Department of the Treasury and IRS

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State Tax Credit Scholarship Programs

Currently, ~30 states have their own tax credit scholarship programs. These pre-date the Education Freedom Tax Credit program and vary significantly by state.

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• Jurisdiction: Individual state programs
• Tax Type: State income tax credits (and some corporate tax credits)
• Credit Amount: Varies widely by state 
• Maturity: Some programs date back to 1997
• Caps: Most states have annual program caps
• State Authority: Each state controls its own program‍
• Oversight: State departments of revenue and education