The Education Freedom Tax Credit (EFTC) begins with qualifying contributions starting January 1, 2027, creating a new federal pathway for scholarship support.

For families, preparation does not mean rushing to apply today. It means understanding how the initiative works, watching what happens in your state, exploring educational options, and knowing where to look for reliable updates.

Because implementation is still developing, availability may differ by state and by Scholarship Granting Organization, or SGO.

Start With Your State

The EFTC depends on state participation.

A state must take the required steps to opt-in to the federal initiative and provide information about qualifying SGOs. That means scholarship opportunities will not necessarily be available in every state at the same time.

Some states have already taken advance steps toward participation for 2027, but an advance election does not necessarily mean every part of implementation is complete or that every SGO qualifies for federal EFTC participation.

For families, the practical takeaway is simple: Check your state’s current status before assuming scholarships will be available.

Understand How EFTC Scholarships Work

Families do not claim the federal tax credit themselves in order to receive a scholarship.

Instead, eligible taxpayers make cash contributions up to $1,700 to qualifying SGOs and receive a dollar-for-dollar tax credit. Those organizations then use the funds to provide scholarships to eligible students according to federal requirements.

The basic pathway looks like this:

Taxpayer contribution → qualifying SGO → scholarship opportunity → eligible student

SGOs are responsible for administering scholarship funds and following the requirements that apply to student eligibility, scholarship awards, and qualified education expenses.

A qualifying contribution also cannot be earmarked for a particular student, so a taxpayer cannot direct an EFTC contribution to one specific child.

Learn About Student Eligibility

Federal law establishes several requirements for students receiving EFTC-funded scholarships.

Among them, the student must be eligible to enroll in a public elementary or secondary school, and household income cannot exceed 300% of the applicable area median gross income under the federal standard incorporated into Internal Revenue Code Section 25F.

Other details, including how income will be verified and how some procedures will work, remain subject to federal implementation guidance.

Families should avoid assuming eligibility based on a single factor. Final determinations will depend on the requirements in effect and the processes used by participating SGOs.

Explore Educational Options Before You Need to Decide

Families can also use this time to think about what they want from an educational environment.

Consider questions such as:

• What kind of learning environment helps your child thrive?
• Which educational options are available in your area?
• What are the school’s admissions requirements and timelines?
• What tuition, fees, transportation, or other education costs should you understand?
• Does the school participate in scholarship opportunities today?

Exploring options now does not commit your family to a particular school or scholarship. It simply helps you understand what choices may be available if EFTC scholarship opportunities develop in your state.

Know What Scholarship Funds May Cover

Federal law connects EFTC scholarships to qualified K-12 education expenses described in existing federal tax law.

These can include categories such as tuition and fees, academic tutoring, special needs services, books, supplies, equipment, qualifying transportation, and certain technology-related expenses.

However, the details matter. Not every expense that sounds educational will automatically qualify, and additional federal guidance is expected on some categories.

Families should rely on current guidance and information from the participating SGO rather than assuming an expense will be covered.

Watch for EFTC Updates

Because the EFTC is new, some important implementation details are still evolving.

Families should watch for updates from their state, participating SGOs, schools they are considering, and trusted Scholarship Granting Organizations such as ACE Scholarships. Federal guidance from the IRS and the U.S. Department of the Treasury can also clarify how the initiative works.

It is especially important to distinguish between a state taking steps to opt-in and scholarship opportunities actually being available to families.

Those are not always the same step.

Prepare Without Creating Unnecessary Urgency

There is no need to treat the EFTC as a first-come, first-served opportunity before SGO participation, application timelines, and other implementation details are established.

A better approach is to stay informed.

You can learn how the initiative works, review your state’s status, explore educational options, organize basic household and school information, and watch for scholarship application guidance as it becomes available.

That way, if an opportunity becomes available for your family, you will be better prepared to evaluate it.

Keep the Focus on the Best Educational Fit

The EFTC is ultimately about expanding educational opportunities for students.

For families, the goal is not simply to find a scholarship. It is to understand whether new scholarship support could help your child access an educational environment that best fits their needs and helps them thrive.

For more than 25 years, ACE Scholarships has helped families access educational opportunities for their children. ACE will continue sharing information as EFTC implementation develops so families can understand their options and make informed decisions.

Explore Your State to see current participation information and learn what may be available where you live.