Donor guide
How to Give and Claim the Education Freedom Tax Credit
Give in four steps and claim the Education Freedom Tax Credit, also called the Federal Scholarship Tax Credit (FSTC), of up to $1,700 per person, or up to $3,400 for married couples filing jointly. Gifts qualify beginning January 1, 2027.
Last updated October 20, 2026
The Short Answer
Give cash to an eligible scholarship granting organization (SGO). Keep the acknowledgement it sends. Claim the nonrefundable Education Freedom Tax Credit (also called the Federal Scholarship Tax Credit, or FSTC) of up to $1,700, or up to $3,400 for married couples filing jointly.
- Up to $1,700per individual
- Up to $3,400married filing jointly
- Jan 1, 2027gifts qualify beginning
- 5 yearsunused credit carries forward
Sources: IRS IR-2026-117 (opens in a new tab), Treasury EFTC FAQ (opens in a new tab)
Before You Give
Three quick checks help you use the full credit.
Do you owe federal income tax?
The credit cannot exceed your federal tax. Unused credit carries forward up to five years.
Is your state participating?
The IRS lists 30 participating states as of September 14, 2026. You can give to an SGO in any of them, no matter where you live.
Did you claim a state credit for the same gift?
A state tax credit for the same gift reduces the amount eligible for the federal credit.
How Much Can You Claim?
Up to $1,700 per individual, or up to $3,400 for married couples filing jointly, for qualified cash gifts in a year. Each spouse on a joint return has a $1,700 cap.
Will I owe enough tax to use it?
The credit cannot exceed your federal tax, but unused credit carries forward up to five years. Use the calculator to estimate yours.
Can I also deduct the gift?
A gift claimed for the credit cannot also be deducted as a charitable contribution. Ask a tax professional how this applies to you.
Estimate Your Credit
Estimate your credit
Answer three quick questions to see how much of your federal tax you could direct to scholarships. Your answers are not saved.
Open the calculatorFour Steps
Dates reflect Treasury and IRS guidance as of October 2026 and may change.
Step 1: Choose an eligible SGO
Choose a scholarship fund from the IRS list of qualifying SGOs before you give. States submit their lists by February 15, 2027.
Step 2: Make a qualifying cash gift
Give cash by check, electronic transfer or after-tax payroll deduction, and tell the SGO it should qualify. Digital assets do not count.
Step 3: Keep your acknowledgement
Your SGO sends your unique donor number by January 31 of the next year. Keep it with your tax records.
Step 4: Claim the credit on your return
Claim the credit with your donor number. Gifts made in 2027 go on your 2027 return, filed in 2028.
Which States Are Participating?
The IRS lists 30 participating states as of September 14, 2026. You can give to an SGO in any participating state, no matter where you live.
- Participating (30)
- Not on the IRS list
View the states as a list
- Alabama
- Alaska
- Arkansas
- Colorado
- Florida
- Georgia
- Idaho
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Virginia
- West Virginia
- Wyoming
Source: IRS, participating states for 2027, as of Sept 14, 2026.
My state isn't on the list
You can still give to an SGO in a participating state and claim the federal credit. Scholarships go to students in states where the SGO is listed.
Common Mistakes to Avoid
Four things to get right before you give.
Giving before January 1, 2027
Gifts qualify beginning January 1, 2027. Sign up now, then give once gifts open.
Giving to an organization not on the IRS list
Check the IRS list of qualifying SGOs first.
Trying to pick a specific student
Donors cannot earmark a gift for a specific student. The SGO makes scholarship decisions.
Losing your acknowledgement
You need your donor number to claim the credit. Save it with your tax records.
Donor Resource Catalog
Official sources, tools and guides in one place, so you can understand the credit before you give.
Official sources
- IRS: Federal Scholarship Tax Credit and participating states (opens in a new tab)
- IRS news release IR-2026-117 (opens in a new tab)
- Treasury press release (opens in a new tab)
- Treasury and Education Department FAQ (PDF) (opens in a new tab)
- Proposed regulations (Federal Register) (opens in a new tab)
- Temporary regulations for states and SGOs (opens in a new tab)
Tools and guides
FAQ
Frequently Asked Questions
Yes. You can give to an SGO in any participating state, regardless of where you live. Scholarships serve students who live in states where the SGO is listed, so your state's decision affects where scholarships can go, but it does not stop you from giving.
Check the IRS list of qualifying SGOs before you give. States must submit their SGO lists by February 15, 2027, so the list may still be updating when gifts open. Ask any SGO whether it is on the list and how it issues your donor number.
Your SGO sends a written acknowledgement with your unique donor number by January 31 of the year after your gift. You need that number to claim the credit, so keep it with your tax records.
No. Treasury and the IRS issued proposed regulations on October 1, 2026, with a public hearing scheduled for December 15, 2026. Rules may change before they are final. Taxpayers may rely on the proposed rules if they follow them fully.
Under the proposed rules, the gift must be cash, including checks, electronic transfers and after-tax payroll deductions. Digital assets do not count. You must designate the gift as a qualified contribution when you give, and any goods or services you receive in return reduce the qualified amount.
No. You do not need to itemize deductions to claim the credit. A gift claimed for the credit cannot also be deducted as a charitable contribution. Talk with a tax professional about how this applies to your return.
No. Donors cannot earmark a gift for a specific student. You can share a preference for a type of fund, but that is an expression of interest, and the SGO makes the final scholarship decisions under its own rules and the law.
Under the proposed rules, students must be eligible to enroll in a public elementary or secondary school, with household income no more than 300% of area median gross income. Treasury estimates about 96% of children in participating states would be eligible. Final rules may differ.
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