StatesVirginiaEFTC · §25F

Opted in

EFTC in Virginia

Virginia is participating in the federal Educational Choice for Children Act scholarship program. Also known as the Federal Scholarship Tax Credit (FSTC), the program was enacted as IRC §25F and takes effect January 1, 2027.

Governor: Abigail Spanberger; Democrat
Status: Opted in; As of 2026-01-01; Election made by Gov. Glenn Youngkin
Program begins: January 1, 2027; Federal tax credit live

Contact Governor Spanberger →

What EFTC means for Virginia

Because Gov. Glenn Youngkin opted Virginia into EFTC, families in Virginia will be eligible for scholarships funded through the program when it goes live on January 1, 2027. Scholarship Granting Organizations (SGOs) on Virginia's list will receive donations from federal taxpayers and award them as scholarships to qualifying K-12 students who live in Virginia.

Under Treasury's temporary regulations, released October 1, 2026, which take effect without a comment period and apply from September 1, 2026, Virginia completes its 2027 election by submitting its list of SGOs to the IRS by February 15, 2027; if a state misses that date, no organization in it qualifies as an SGO for 2027. The list must include every organization located in Virginia that asks to be on it and meets the federal requirements, and the state may not impose operating rules on SGOs that are stricter than §25F, such as limits on the types of schools or expenses scholarships can cover.

Donors in Virginia, and anywhere else in the country, can claim a federal income tax credit of up to $1,700 per taxpayer for contributions to a qualifying SGO, beginning January 2027. Under Treasury's proposed regulations, which taxpayers may rely on for 2027 contributions, spouses filing jointly are treated as separate taxpayers, so a married couple can claim up to $3,400 when each spouse makes and designates a gift. The credit is nonrefundable and capped, but it lets taxpayers redirect federal income tax that would otherwise go to the U.S. Treasury into scholarships for students in Virginia or any other participating state.

Virginia's participation means credit-eligible gifts from Virginia donors can fund scholarships for students who live here, rather than flowing only to scholarship organizations in other states. Under the proposed regulations, the student's state of residence is what counts: a Virginia student can use a scholarship from a Virginia-listed SGO at a school in another state, while a student who lives elsewhere cannot receive one, apart from narrow exceptions for military and tribal families.

Frequently asked questions about EFTC in Virginia

Does Virginia participate in EFTC?

Yes. Gov. Glenn Youngkin opted Virginia into the program (decision: 2026-01-01), making Virginia families eligible for scholarships when the program begins on January 1, 2027. Under Treasury's temporary regulations, Virginia completes its 2027 election by submitting its list of qualifying Scholarship Granting Organizations (SGOs) to the IRS by February 15, 2027, and participation is elected again each year.

Who is the governor of Virginia and what is their position on EFTC?

Governor Abigail Spanberger (Democrat) did not make the election; Gov. Glenn Youngkin did, and the sitting governor decides only whether to renew it. Outgoing Gov. Youngkin (R) filed the election days before leaving office, effective January 1, 2026; Spanberger inherited it and decides only whether to renew. Virginia is also the only state to have put an SGO list in front of Treasury: Youngkin's January 9, 2026 letter named eight organizations.

Can Virginia residents donate to an SGO and claim the federal tax credit?

Beginning January 1, 2027, any U.S. citizen or resident can claim a federal income tax credit of up to $1,700 a year per taxpayer for donations to a qualifying Scholarship Granting Organization, regardless of the state they live in. Under Treasury's proposed regulations, which taxpayers may rely on for 2027 contributions, spouses filing jointly are separate taxpayers, so a couple can claim up to $3,400 when each spouse makes and designates a gift. Virginia residents can give to SGOs on Virginia's list, which fund scholarships for students who live in Virginia, or to an SGO in any other participating state.

When does the EFTC program begin?

The Educational Choice for Children Act program begins on January 1, 2027. Donations made on or after that date are eligible for the federal tax credit. Under Treasury's temporary regulations, released October 1, 2026, each state elects one calendar year at a time: for 2027, a state must file an advance election with the IRS by January 1, 2027 and submit its list of qualifying Scholarship Granting Organizations by February 15, 2027. For later years, state lists are due by January 1.

Becoming an SGO in Virginia

To operate as a Scholarship Granting Organization (SGO) in Virginia under the federal Education Freedom Tax Credit, an organization must meet the §25F requirements that apply in every participating state, plus Virginia’s own application, documentation, and reporting requirements. Treasury’s temporary regulations (October 2026) limit that state layer: a state must require compliance with its general charity laws and must require application, documentation, and financial reporting tailored to the federal tests and to fraud prevention, but it may not make SGOs operate under rules stricter than §25F, such as limits on the types of schools or expenses scholarships can cover. Here is the current picture.

Certification status: Initial list sent to Treasury

Administered by: Office of the Governor

SGO-list deadline: February 15, 2027 (federal deadline for the 2027 list)

How Virginia opted in: Gov. Youngkin's executive advance election (January 2026), the first state to opt in

Federal requirements (apply in every state)

Be a 501(c)(3) public charity: tax-exempt and not a private foundation. If your exemption application is still pending, the temporary regulations let a state list you only if the exemption, once granted, takes effect by January 1 of the list year.
Be located in the state: authorized to do business there and in compliance with its general charity laws. No in-state headquarters is required (temporary regulations).
Keep a separate §25F account that holds only qualified contributions and their earnings, and deposit every gift a donor designates for the credit into it.
Spend at least 90% of the organization's income on scholarships for eligible students. Under the proposed regulations, each year's income must be spent by the end of the taxable year after the year it comes in, and income means total gross receipts from all sources, but an SGO whose activities are at least 85% scholarship granting can apply the test to its §25F account (qualified contributions plus earnings) instead.
Award scholarships to 10 or more students who do not all attend the same school.
Fund only eligible students: household income at or below 300% of area median gross income and eligible to enroll in a public school. Under the proposed regulations, the student must also live in the state whose list the SGO is on, with exceptions for military and tribal families.
Verify each applicant's household income and family size, and pay only for qualified elementary or secondary education expenses.
Give priority to students who received a scholarship the previous school year, then to their siblings.
Do not earmark or set aside contributions for a particular student.
Pay no scholarships to disqualified persons: substantial contributors, officers, directors, anyone who helps select recipients or set awards, and their family members (proposed regulations).
Register in the IRS SGO portal (not yet open), give each donor a written acknowledgment by January 31 of the following year, and report designated gifts to the IRS by February 28 (temporary regulations).
Get an annual financial and programmatic audit, from an independent professional if total receipts exceed $500,000, and file an annual compliance certification with your Form 990 (proposed regulations).
Appear on your state's SGO list, which the state submits to the IRS each year. The state must include every organization located there that asks to be listed and meets these requirements, and may remove one only through a procedure that affords due process (temporary regulations).

Sources: the §25F statute; Treasury’s temporary regulations (T.D. 10057), which take effect without a comment period and apply from September 1, 2026; and its proposed regulations (October 2026), which taxpayers, SGOs, and states may rely on for contributions made on or after January 1, 2027 but which are not final.

Virginia-specific requirements

Virginia has not published SGO requirements beyond the federal rules yet. Treasury’s temporary §25F regulations, released October 1, 2026, give participating states until February 15, 2027 to submit their 2027 SGO lists, and each list must include every organization located in the state that asks to be on it and meets the federal requirements, so watch for Virginia’s application window before then.

Virginia is the only state to have sent Treasury an SGO list: Gov. Youngkin sent Treasury and the IRS a letter on January 9, 2026 naming eight organizations, two Virginia-based and six national, noting the list may be updated as federal guidance arrives. Under Treasury's temporary regulations, Virginia's formal 2027 list, with the required certifications, is due to the IRS by February 15, 2027 and must include every organization located in Virginia that asks to be listed and meets the federal requirements, so the letter's eight names are not a closed list. The election is annual, so participation past the 2027 launch depends on Gov. Spanberger choosing to renew it.

Sources: EdNewsVA: Virginia is first state to formally opt in; Youngkin's letter naming the initial eight SGOs (January 2026); WVVA: Virginia's initial SGO list, two in-state and six national organizations (January 9, 2026)

Full walkthrough: how to start an SGO. The intake, income verification, receipting, and disbursement a compliant program needs can run on software built specifically for the §25F workflow.

Starting an SGO in Virginia? Work the free SGO builder, a 21-step checklist that saves your progress, or retrofit an existing nonprofit.

Scholarship Granting Organizations in Virginia

40 Scholarship Granting Organizations currently serve Virginia through state tax-credit scholarship programs and national networks, the organizations most likely to administer the federal EFTC here once official §25F lists are certified.

Browse SGOs in Virginia →

Other states with the same status

States that have also opted in.

See all 50 states →

Recent Virginia EFTC / FSTC news

Coverage of Virginia’s Federal Scholarship Tax Credit decisions and developments.

For operators

Running an SGO?

SGO HQ helps scholarship-granting organizations manage applications, compliance, and donor records, built for the EFTC from day one.

Learn about SGO HQ

Learn more about EFTC

In-depth guides on how the program works, who qualifies, and how to participate.

Ask Governor Spanberger to keep Virginia in

Virginia's election was made by Gov. Glenn Youngkin. Renewal is now Governor Spanberger's call, and it comes up every year, so ask that Virginia stay in and families here keep access when the credit goes live January 1, 2027.