Federal Education Freedom Tax Credit: What Families Need to Know

The Education Freedom Tax Credit, enacted as part of recent federal legislation, represents the first-ever federal tax incentive specifically designed to support private school choice through Scholarship Granting Organizations (SGOs).

Starting in January 2027, individuals who donate to qualifying SGOs can claim a federal tax credit of up to $1,700 per year ($3,400 for married couples filing jointly). This credit is in addition to any state-level tax credits, meaning families in states like Arizona, Florida, or Georgia can stack both credits for maximum benefit.

To qualify, the SGO must be a 501(c)(3) nonprofit organization that serves at least 10 students and directs at least 90% of donated funds directly to student scholarships. The SGO must also operate in a state that has opted into the program.

For families receiving SGO scholarships, this federal credit doesn't change anything directly — the scholarships remain tax-free. But it significantly increases the pool of available scholarship funding by incentivizing more donations to SGOs.

School Choice USA maintains a directory of 125+ SGOs nationwide. Many of these organizations are expected to qualify for the federal credit once their states opt in. Check our SGO directory to find organizations serving your area.