The federal scholarship credit, animated
Short explainers built from the same verified research as our written guides, the mechanics, the math, the maps, and the fine print of the Education Freedom Tax Credit.
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What is the Education Freedom Tax Credit?
One federal program, four different people. The credit-not-a-deduction mechanic worked through a real $10,000 tax bill, then what it means for donors, families, schools and the people running a scholarship organization.
Read the full guideWhat is the Federal Scholarship Tax Credit?
FSTC, EFTC, ECCA and §25F are four names for one program. Who uses which name, why the IRS says FSTC, and the one check that settles it: the section number.
Read the full guideIn 2027, you flip the switch
Up to $1,700 of federal tax you already owe, redirected to a student's scholarship. Same money out of pocket, a student gets a scholarship.
Read the full guideHow the EFTC works: donor → SGO → student
The whole system animated: the three-player loop, why a credit beats a deduction 4.5-to-1, what scholarships cover, and the 30-state map.
Read the full guideExplaining the EFTC to your community
The three sentences that land, credit not deduction, any amount up to $1,700, starts Jan 1 2027, plus the two honest guardrails.
Read the full guideDonors
December 2026 or January 2027?
The same cash gift three weeks apart is worth very different amounts. What a 2026 gift is still worth, and the three rules to plan around: cash only, no double benefit, five-year carryforward.
Read the full guideClaiming your $1,700: a three-step errand
Give to a listed fund, keep the acknowledgment with your donor number (no SSN), file the number. Plus the Dec-2026/Jan-2027 timing cliff.
Read the full guide529 vs. state credits vs. the EFTC
Three different machines: a savings account, a state program, and the uniform federal credit, and how they stack (never the same dollars).
Read the full guidePoint your gift at your school
School designation is allowed; student earmarking is prohibited (§25F(d)(1)(E)). How school communities run the giving model.
Read the full guideThe EFTC for practitioners: four rules + the haircut
Credit-not-deduction for standard-deduction clients, one treatment per dollar, the 5-year carryforward, and the §25F(b)(2) state-credit trap.
Read the full guideDon't wait for the refund: the W-4 move
Adjust your withholding for the expected $1,700 credit and take it home at roughly $141 a month, with the one rule that keeps it clean: give first, then adjust.
Read the full guideFamilies
Homeschool and microschool: where the money can reach
The federal expense list is broad, but the statute hands the definition of an eligible student back to state law, and in roughly half the states that blocks homeschooling families.
Read the full guideWhat it means for a private school
The scholarship follows the student, not the school. Why your school is not a stop on the money path, and what that changes about who you should actually be talking to.
Read the full guideWhat the credit pays for (not just tuition)
It borrows the Coverdell 530(b)(3) list: tutoring, books, technology, testing fees, and services for disabilities. Eligibility follows the student, so public-school students can qualify.
Read the full guideWho qualifies? Exactly three tests
K-12, household income up to 300% of area median (higher than you assume), and a participating state. Measured by county and family size.
Read the full guideHomeschool: where the scholarship can follow the child home
Our verified 50-state map: 15 states where it likely works, 24 where it likely doesn't, 12 gray, and the Treasury rule that decides.
Read the full guideLearning differences: the most flexible money yet
OT, PT, speech, behavioral therapy, at a specialized school or on top of public-school services. No IEP required by the federal law.
Read the full guideNo, it's not private-school-only
The scholarship is defined around the student. Tutoring, technology, books, and services for kids who stay in public school.
Read the full guideRunning an SGO
How to start a Scholarship Granting Organization
The honest sequence for founding an SGO under the federal credit, in order: incorporating, 501(c)(3), the separate bank accounts founders skip, fundraising registration, getting on your state's list, and the 90/10 ceiling that shapes everything after.
Read the full guideThe 90/10 rule, and the rules underneath it
At least 90% of receipts go out as scholarships and 10% is the ceiling on everything else. What that means on a million dollars raised, plus the seven requirements underneath the headline rule.
Read the full guideThe SGO compliance calendar
Compliance is not one filing, it is a recurring calendar. The obligations that never stop, the annual layer, and why the miss is structural rather than careless.
Read the full guideWhich SGOs qualify, and how donors verify one
A donation only earns the credit if the scholarship organization is on the list its state submits to the federal government. The two gates an organization clears, and why the federal list can lag a state's roster.
Read the full guideDisbursing scholarship funds to schools
The money-out side: scholarship funds must never touch operating accounts, the money follows the student, and every disbursement needs an audit-clean record.
Read the full guideIncome verification: proving a family qualifies
Every scholarship goes to a household at or below 300% of area median gross income, and the SGO must prove it. What 'area' means, and what the organization documents.
Read the full guideRecruiting donors for your SGO
The credit changes the pitch: a donor redirects up to $1,700 of tax they already owe, dollar-for-dollar. Who to ask, and the 10% cap that constrains acquisition.
Read the full guideThe SGO: the money doesn't run itself
The 90/10 rule, the fine print with teeth, the January 1 list deadline, and the operator's day-to-day loop.
Read the full guideSGO software: why spreadsheets break in year one
Per-donor receipts, 300%-AMGI verification, per-state accounts, award priority, and why every manual hour eats the 10% admin cap.
Read the full guidePolicy
How a state opts in, and why it happens every year
The credit is federal, but participation is a state decision, made by one office and renewed annually. What the election actually is, and why opting out does not stop residents claiming the credit.
Read the full guideState programs and the federal EFTC, stacked
The federal credit is a second, separate system from existing state tax-credit scholarship programs. How they interact, and whether a donor can use both.
Read the full guideIs this a voucher? No, here's the difference
Voucher vs. ESA vs. EFTC by funding source: with the EFTC, no government check ever moves. And how the programs combine.
Read the full guideSitting out doesn't save money, it exports it
Opting in costs a state $0. Sitting out means your taxpayers' donations fund other states' kids while home-state kids get nothing.
Read the full guideFive dates that decide the EFTC
Signed July 2025, advance elections from January 2026, proposed regs by September, first donations January 1 2027, first claims in 2028.
Read the full guideTreasury's §25F preview: the five headlines
Donor numbers (no SSNs), per-state accounts, multistate SGOs, reliance for 2027, and full proposed regulations by end of September.
Read the full guideThe credit's real risk isn't politics, it's uptake
The leaky funnel from eligible to filed-correctly, the frictions that lose people at every step, and why SGOs sit exactly where the program is won or lost.
Read the full guide
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