The Internal Revenue Service announced that 27 states have elected to participate in the Federal Scholarship Tax Credit program, enabling eligible taxpayers to claim a federal tax credit of up to $1,700 for qualified contributions to Scholarship Granting Organizations that fund K-12 education expenses.
The program, enacted under the One, Big, Beautiful Bill passed by Congress in July 2025, represents the first federal school choice initiative of its kind. State participation is entirely voluntary, and as of mid-June 2026, about 30 states have formally enrolled, including Alabama, Alaska, Arkansas, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Louisiana, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming, according to the IRS announcement released June 8, 2026.
“It’s encouraging to see that 27 states have already signed up to participate in this program that promotes and supports elementary and secondary education,” said IRS Chief Executive Officer Frank J. Bisignano. “We are hopeful that additional states will decide to participate.”
The tax credit operates as a dollar-for-dollar federal incentive: taxpayers in participating states can reduce their federal tax liability by $1 for every $1 they donate to approved Scholarship Granting Organizations, up to the $1,700 annual cap. The program is set to begin in tax year 2027, according to the Education Commission of the States.
To qualify as a Scholarship Granting Organization eligible for tax-deductible donations, nonprofits must maintain 501(c)(3) status, avoid co-mingling funds with other purposes, and spend at least 90% of their revenue on scholarships for eligible students. Eligible students must come from households earning no more than 300% of their area’s median gross income and must be eligible to attend public school in their state. Scholarships can cover tuition, fees, tutoring, books, supplies, technology, and other qualified K-12 education expenses.
The program applies to both private and public school students. For private school students, scholarships fund tuition and fees; for public school students, donations support services like academic tutoring and support for students with disabilities, according to details released by the U.S. Department of the Treasury in June 2026. The Treasury Department said that homeschools will qualify as schools under the program if they are treated as schools under state law.
The IRS will maintain and update the official list of participating states as they complete the required election and submission process. The Treasury Department is expected to release full guidance on the program by the end of September 2026, addressing remaining questions about eligible expenses and administration.
Sources
- Internal Revenue Service — IRS announcement (IR-2026-76, June 8, 2026) confirming 27 states’ participation, the $1,700 tax credit amount, and list of participating states
- EdNC — June 16, 2026 article providing Treasury Department details on eligible expenses, income verification, and program launch date
- Education Commission of the States — May 20, 2026 policy analysis explaining program mechanics, SGO requirements, and state participation status
