The federal scholarship tax credit
Starting in 2027, people who give to a Scholarship Granting Organization (SGO) can take up to $1,700 a year off their federal income tax. SGOs use those gifts to pay for K–12 scholarships for students whose families are under an income limit. To start, check whether your state is taking part, then find an SGO.
Source: IRS, Federal Scholarship Tax Credit · as of Sep 14, 2026
Source: Treasury proposed regulations, Federal Register 2026-20277 · as of Oct 2, 2026
- Donorgives money to an SGO
- SGOturns gifts into scholarships
- Scholarshipis awarded to a student
- Familyuses it for school costs
- Schoolis paid for the student’s schooling
For donors
A tax credit lowers the tax you owe, dollar for dollar. If you give $1,000 to an SGO, your federal income tax can go down by $1,000. The most you can claim is $1,700 a year. If your credit is more than the tax you owe, you can use the rest over the next 5 years.
Give cash, a check or a card payment, and tell the SGO when you give that the gift is for this tax credit. If your state also gives you a tax credit for the same gift, your federal credit goes down by that amount. You can't also deduct the gift as a charitable donation.
Source: Treasury proposed regulations, Federal Register 2026-20277 · as of Oct 2, 2026
Source: Treasury temporary regulations, Federal Register 2026-20264 · as of Oct 2, 2026
For families
A student can get a scholarship if they could enroll in a public K–12 school and their household income is no more than 300% of the area median income. That means up to three times the middle income for the area where you live. Scholarships pay for the costs of going to school.
You apply to an SGO, not to the IRS. Each SGO runs its own application and checks your income. Students who had a scholarship last year, and their brothers and sisters, come first. Some SGOs set stricter rules of their own. Find your school to see the scholarships its students can use.
Source: Treasury proposed regulations, Federal Register 2026-20277 · as of Oct 2, 2026
Source: Treasury temporary regulations, Federal Register 2026-20264 · as of Oct 2, 2026
For schools
Families use scholarships to pay school costs. A state can't limit which kinds of schools scholarship students attend. An SGO can't set gifts aside for one student, and it must give scholarships to at least 10 students who don't all go to the same school. Each school on SGO Index has a page listing the scholarships its students can use.
Source: Treasury temporary regulations, Federal Register 2026-20264 · as of Oct 2, 2026
Source: Treasury proposed regulations, Federal Register 2026-20277 · as of Oct 2, 2026
Is my state in?
Each state chooses whether to take part. A state that takes part sends the IRS a list of the SGOs it has approved, and only gifts to SGOs on a state's list earn the credit. Lists for 2027 are due by Feb 15, 2027, and the IRS will publish one combined list. See which states are taking part.
Source: IRS, Federal Scholarship Tax Credit · as of Sep 14, 2026
Source: Treasury temporary regulations, Federal Register 2026-20264 · as of Oct 2, 2026
Common questions
What is a Scholarship Granting Organization (SGO)?
An SGO is a nonprofit charity that turns donations into scholarships for K–12 students. It must be on the SGO list of a state that is taking part, spend at least 90% of its income on scholarships, and give scholarships to at least 10 students who don't all go to the same school.
Source: Treasury proposed regulations, Federal Register 2026-20277 · as of Oct 2, 2026
Is a tax credit the same as a tax deduction?
No. A tax credit takes money off the tax you owe, dollar for dollar, up to $1,700 a year. A deduction only lowers the income your tax is figured on. You can't take both for the same gift.
Source: Treasury proposed regulations, Federal Register 2026-20277 · as of Oct 2, 2026
When does the federal scholarship tax credit start?
Gifts made on or after Jan 1, 2027 can earn the credit.
Source: IRS, Federal Scholarship Tax Credit · as of Sep 14, 2026
Which students can get a scholarship?
Students who can enroll in a public K–12 school and whose household income is no more than 300% of the area median income (the middle income for the area where they live). Each SGO can set stricter rules of its own.
Source: Treasury proposed regulations, Federal Register 2026-20277 · as of Oct 2, 2026
How do I find an SGO on SGO Index?
Search by school, by SGO name or by state. We list SGOs on a participating state's official list, each matched to its IRS record. States send their 2027 lists to the IRS by Feb 15, 2027, and we add SGOs as lists appear. Until then, SGOs can ask to be listed early: we check each one's EIN with the IRS and label it “Not on a state list yet”.
Source: Treasury temporary regulations, Federal Register 2026-20264 · as of Oct 2, 2026
This page explains the program in plain words. It is not tax advice. The rules may change: Treasury's rules are temporary and proposed, and open for public comment.