Which States Have Opted Into the Education Freedom Tax Credit?

Thirty states have made an advance election to participate in the Education Freedom Tax Credit (EFTC) in 2027, according to the IRS list of advance elections as of July 24, 2026.

The EFTC creates a new way for communities to help fund K–12 scholarships and expand educational opportunities for students. But whether EFTC-funded scholarships can support students in a particular state depends on that state’s participation.

Because state participation can change, families, taxpayers, schools, and community organizations should check the latest status as the initiative moves toward its January 1, 2027, start.

Which States Are Participating in the EFTC?

The IRS currently lists these states as having made an advance election under Section 25F for 2027:

Alabama	Alaska	Arkansas
Colorado	Florida	Georgia
Idaho	Indiana	Iowa
Kansas	Kentucky	Louisiana
Mississippi	Missouri	Montana
Nebraska	Nevada	New Hampshire
North Dakota	North Carolina	Ohio
Oklahoma	South Carolina	South Dakota
Tennessee	Texas	Utah
Virginia	West Virginia	Wyoming

This list is an important milestone, but an advance election is not the final administrative step.

States that make an advance election must later complete (or “perfect”) that election by submitting a list of qualifying Scholarship Granting Organizations (SGOs) to the IRS. If a state does not submit its SGO list by the required deadline, organizations in that state will not qualify as SGOs under Section 25F for that calendar year.

That distinction matters when you see a state described as having “opted-in.”

Why Does State Participation Matter?

The EFTC is a federal tax credit initiative, but states decide whether to participate.

Beginning January 1, 2027, eligible individual taxpayers may claim a nonrefundable federal tax credit of up to $1,700 to eligible SGOs like ACE Scholarships. Those organizations use those qualified contributions to fund K-12 scholarships in participating states.

In other words, the federal opportunity exists nationwide for eligible taxpayers, but EFTC-funded scholarships can only be delivered to students in states that complete the federal participation requirements.

That is why your state’s status is one of the first things to understand.

What Can EFTC Scholarships Help Cover?

The EFTC is designed to help more students access educational resources that fit their children’s needs.

Qualifying scholarship expenses may include tuition, tutoring, special needs services, and other qualifying eligible K–12 educational expenses and resources.

The goal is not to prescribe one kind of education. It is to help families gain greater access to resources that can help their children learn, grow, and reach their potential.

Who Can Be Eligible for an EFTC Scholarship?

Federal law establishes requirements for students who receive scholarships funded through qualified EFTC contributions.

An eligible student must live in a household with income at or below 300% of area median gross income (AMI) for the preceding calendar year. The student must also be eligible to enroll in a public elementary or secondary school.

Additional federal guidance is still developing ahead of the initiative’s 2027 launch. Families should rely on current guidance and the requirements that apply in their state when scholarship applications become available.

What If My State Has Not Opted-In?

If a state has not made an advance election for 2027, EFTC-funded scholarships are not currently available for students in that state.

However, that does not mean residents are excluded from the larger opportunity. ACE Scholarships can collect EFTC contributions across the country, while EFTC scholarships are delivered only in participating states. Every state can contribute to the EFTC, but funds will be diverted to participating states. This distinction helps ensure that families and taxpayers understand where scholarship funding can be put to work.

Residents of a state that has not opted-in can also reach out to their state’s officials to ask about participation status as 2027 approaches.

How Do SGOs Fit In?

Scholarship Granting Organizations (that’s us!) are central to how the EFTC works.

Under Section 25F, a participating state identifies qualifying SGOs. These organizations receive qualified contributions and use those funds to deliver scholarships for eligible students within the state where the SGO is listed.

As a leading national Scholarship Granting Organization (SGO) for more than 25 years, ACE Scholarships has helped connect students with educational opportunities that make it possible to meet their needs. ACE serves as the trusted guide, helping turn community participation into real impact toward educational freedom.

What Should Families and Taxpayers Do Next?

As the EFTC takes effect in 2027, state participation will help determine where new educational opportunities can be made possible for students and families.

Check your state’s EFTC participation and learn what’s possible in your community.