Solutions · Federal Scholarship Tax Credit
The federal scholarship tax credit was signed into law in July 2025. Theodore gives Scholarship Granting Organizations the operational layer to accept contributions, issue receipts, and report on them from day one.
About the program
In July 2025, Congress passed and the President signed a permanent federal scholarship tax credit for private donations that fund K–12 scholarships. Donors receive a 100% federal income tax credit, up to $1,700 per year, starting in the 2027 tax year.
Established by the Educational Choice for Children Act, signed into law under the OBBB.
Permanent, not a pilot. The credit does not carry a sunset date.
Claimed by donors for contributions to qualified Scholarship Granting Organizations.
Funds K–12 scholarships for tuition, tutoring, special needs services, and education technology.
The program goes live January 1, 2027. Tax-deductibility and credit eligibility are determined by program structure and the SGO's 501(c)(3) status, not by Student First Technologies.
What it means for SGOs
The credit is claimed by donors for contributions to qualified Scholarship Granting Organizations. That makes the SGO the operational bottleneck — donation pages, receipting, eligibility, and reporting all have to work on day one.
A federal credit claim rests on documentation. Automated receipts and year-end tax acknowledgment letters need to be right the first time.
Giving concentrates around tax planning. Manual intake and spreadsheet reconciliation do not scale into that curve.
Contribution-to-disbursement traceability stops being good practice and starts being the evidence an audit asks for.
How Theodore supports FSTC
The Theodore infrastructure that runs state Tax Credit Scholarship programs today extends to the federal credit — same rule engine, same donor and family flows, same reporting layer, configured to the exact rules of the program.
A proprietary ML system built on deontic reasoning — the formal logic of permissions, obligations, and prohibitions — configured per program without code changes.
Contribution intake, automated donor receipts, and year-end tax acknowledgment letters sent from your domain.
Contributions routed into scholarship-eligible per-student wallets, program dependent.
Run state and federal Tax Credit Scholarship programs in parallel on the same platform, each with its own rule set and branding.
Built-in reports to meet Federal Tax Credit Scholarship regulatory requirements, program dependent, with custom configurations via SQL.
Funds held through our sponsor bank, Bangor Savings Bank, Member FDIC. Student First Technologies is a financial technology company, not a bank.
Getting ready
Branding, data migration, staff training, and testing — well ahead of the 2027 tax year.
Eligibility logic, allowable use, and school participation configured into the rule engine — no code changes.
Custom domain with SSL, brand tokens, and transactional email sending from your own domain.
A dedicated implementation lead works through go-live, then an ongoing customer success manager with quarterly reviews.
Branded donation pages per school and fund, live and ready for the first tax year donors can claim the credit.
Compliance without anxiety
A federal credit means federal oversight. Theodore is built so the audit is the easy meeting, not the hard one.
Immutable audit trail. Every donation, decision, and disbursement logged permanently and cryptographically verifiable.
Audit-ready exports. Donor tax documentation, IRS-aligned exports, and contribution-to-disbursement reports generated on demand.
Fraud prevention by design. Restricted categories, real-time vendor validation, and an approved-merchant marketplace.
SOC 2 Type II. Annual third-party audit, encryption at rest and in transit, role-based access control, reports under NDA.
Get in touch
Most SGOs go live in four to six weeks. Starting now leaves room for branding, data migration, staff training, and testing well ahead of the first tax year.
Donor intake, receipting, and year-end tax letters
Rule engine configured to your program's eligibility logic
White-labeled domain, brand tokens, and donation pages
Implementation timeline mapped to the 2027 tax year