Education Freedom Tax Credit: the donor side

From January 1, 2027¹, an individual who gives cash to a Scholarship Granting Organization (SGO) on a state's list can claim a federal tax credit of up to $1,700² a year under the Education Freedom Tax Credit. The credit is nonrefundable³. No organization is on Florida's SGO list yet; the first list is due February 15, 2027⁴.

How the credit works

• Size. A dollar-for-dollar credit capped at $1,700² per taxpayer per year. Under the proposed rules, each spouse on a joint return can claim up to the cap for their own gift, for up to $3,400⁵ in total. The cap does not rise with inflation².
• Nonrefundable, with carryforward. The credit can reduce the federal income tax you owe but cannot produce a refund by itself. Unused credit carries forward for up to 5 years⁶³.
• Who can claim it. Individuals who are U.S. citizens or residents⁷. Gifts made through a partnership or S corporation do not count⁸ for its partners or shareholders. You do not have to⁹ itemize deductions.
• No double benefit. The part of a gift that earns the credit cannot also be deducted as a charitable contribution¹⁰.

Timing and paperwork

• When. Only gifts made on or after January 1, 2027¹ can qualify.
• Cash only. Qualifying forms are currency, check, money order, electronic transfer (including credit/debit card) or after-tax payroll deduction¹¹. Stock, other property and digital assets do not count.
• Designate the gift. You must mark the gift as a qualified contribution when you make it, and that choice cannot be undone¹².
• No earmarking. You may not¹³ direct a gift to a particular student.
• Receipt. The SGO must send a written acknowledgment by January 31 of the year after the gift¹⁴.
• Claiming. The IRS form is Form 8525, Federal Scholarship Tax Credit¹⁵. As of the date we checked it had not been released¹⁵.

Give to an SGO on a state's list

The credit applies only to gifts to an SGO that a participating state has put on its list. You may give to an SGO listed by any participating state¹⁶, wherever you live. Florida's first list is due February 15, 2027⁴, and as of the date we checked it had not been published¹⁷. Before you give, confirm that the organization appears on a state's SGO list.

Organizations that have announced plans for Florida include Step Up, Step Further, which says it will accept donations from January 1, 2027¹⁸, and AAA Scholarship Foundation, which says it intends to become an SGO¹⁹. Neither is on a list yet. See our Step Up, Step Further profile.

How this differs from Florida's FTC program

Florida's own Florida Tax Credit (FTC) Scholarship is a state program. It is funded by contributions to state scholarship funding organizations (SFOs) that earn Florida tax credits; Step Up For Students describes the money as corporate tax-credit donations²⁰. The federal credit is different in three ways:

• It is a federal income tax credit for individuals, not a Florida tax credit.
• The gift goes to an SGO, not an SFO. A state SFO is not an SGO unless it is on a state's SGO list²¹.
• If a gift also earns a state tax credit, the federal credit is reduced by that state credit²².

Families can read about the scholarships themselves on the Education Freedom Tax Credit hub and the state FTC page.

Related

• FAQ: the federal tax credit scholarships
• For providers: the federal tax credit
• AAA Scholarship Foundation profile
• K-12 scholarship deadlines