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Education Freedom Tax Credit Information for Tax & Financial Advisors

Spend Less. Scholarship More. And Earn 3% Back.

The Education Freedom Tax Credit (EFTC), also known as the Federal Scholarship Tax Credit (FSTC), gives eligible taxpayers a new way to support K–12 scholarships and receive a dollar-for-dollar federal tax credit of up to $1,700 per taxpayer, or $3,400 for married couples filing jointly.

ACE Scholarships brings more than 25 years of scholarship experience, and EmpowerEd by ACE Scholarships™ provides the technology and infrastructure to support participation.

What the EFTC Means for Wealth Advisors

The EFTC creates a new consideration for client tax planning beginning in 2027.

Advisors can help eligible clients understand how the EFTC allows them to take advantage of an incredible opportunity to redirect federal income tax liability into scholarships with no out-of-pocket expense.

The EFTC gives U.S. taxpayers the opportunity to contribute to a qualifying nonprofit Scholarship Granting Organization (SGO) like ACE, and in return, receive a dollar-for-dollar tax credit of up to $1,700 per taxpayer, or $3,400 for married couples filing jointly—directly reducing what they owe in taxes.

ACE and EmpowerEd support the contribution and scholarship process behind the scenes, so you can stay focused on helping clients make informed financial decisions.

What the EFTC Means for Tax & Financial Advisors

EmpowerEd

A Simple Path for Client Participation

EmpowerEd provides the technology behind the EFTC contribution experience, giving eligible clients a clear way to make qualifying contributions.

ACE brings the scholarship experience and infrastructure that support the platform, so advisors can stay focused on their clients.

EmpowerEd

Why Advisors Choose EmpowerEd

With ACE and EmpowerEd, Tax & Financial Advisory Services can enhance their advisory value and facilitate transformational benevolence, generating life-changing scholarships while earning a 3% referral fee.

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Client Participation

Give eligible clients a clear pathway to participate in the EFTC.

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Contribution Management

EmpowerEd supports EFTC contribution processing and tracking.

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Client Documentation

ACE provides the necessary documentation to support claiming the federal tax credit when filing taxes.

EmpowerEd Technology

Our platform is built to support contributors, partners, and scholarship administration.

Operational Support

Clients can rely on ACE’s experience with scholarship administration, reporting, and operations.

Proven Experience

ACE has delivered over 121,000 scholarships and distributed more than $395 million in scholarships and Education Savings Accounts.

How It Works for Tax & Financial Advisors

Understand the EFTC

Stay informed about the federal tax credit and applicable requirements.

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Identify Eligible Clients

Help clients determine whether the EFTC may fit their individual tax circumstances.

Clients Participate

Eligible clients make qualifying EFTC contributions through EmpowerEd.

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ACE Supports the Process

ACE and EmpowerEd support contribution processing, tracking, and scholarship administration.

Clients Receive Documentation

Clients receive documentation related to their qualifying contribution for tax reporting purposes.

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Help Your Clients Make It Possible

Give your clients a clear path to participate in the EFTC while you stay focused on their financial needs.

See how ACE Scholarships and EmpowerEd can support you and your clients.

EFTC FAQs

The EFTC is a federal tax credit for eligible contributions to qualified 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.