Frequently Asked Questions
The Education Freedom Tax Credit (EFTC) is a federal tax credit for eligible contributions to qualified Scholarship Granting Organizations (SGOs). Those contributions help fund scholarships for qualifying K–12 educational expenses.
Eligible taxpayers make qualifying cash contributions to participating SGOs. They may then claim a federal income tax credit of up to $1,700 per taxpayer, or $3,400 for married couples filing jointly, for the qualifying contribution, subject to federal requirements and their federal income tax liability.
SGOs use qualifying contributions to provide scholarships that help eligible K–12 students access educational opportunities.
A Scholarship Granting Organization (SGO) is a qualifying nonprofit organization that receives contributions and provides scholarships for eligible K–12 students.
For an EFTC contribution to qualify for the federal tax credit, the SGO must meet federal requirements and be included on the applicable participating state’s SGO list.
Under the EFTC initiative, scholarship funds may be used for expenses incurred in connection with an eligible K–12 student’s enrollment or attendance at a public, private or religious school, including*:
- Tuition, uniforms, transportation and other fees
- Books and supplies
- Academic tutoring
- Extended day programs
- Computer technology, equipment, or internet access
- Educational therapies (e.g., occupational, speech, behavioral, physical)
*as defined by the U.S. Department of the Treasury
Yes. Beginning January 1, 2027, eligible taxpayers in all 50 states with a federal income tax liability can participate in the EFTC and receive a dollar-for-dollar tax credit of up to $1,700 per taxpayer, or $3,400 for married couples filing jointly. However, only states that have opted to participate in the federal tax credit can receive scholarship funding.
Yes. The IRS refers to the EFTC as the Federal Scholarship Tax Credit (FSTC). Both names refer to the same federal tax credit.
The SGO is responsible for administering qualifying contributions and scholarships in accordance with federal requirements. This includes determining student eligibility, distributing scholarships, maintaining required records, and meeting applicable compliance requirements.
A qualifying EFTC contribution must be made to an eligible SGO included on the applicable participating state’s list.
