Feds provide guidance on new federal K-12 scholarship tax credit program

The Treasury Department released guidance Thursday for the Education Freedom Tax Credit, created by the 2025 tax law, which lets individuals claim a federal tax credit of up to $1,700 for donations to scholarship organizations funding private school tuition, tutoring and related services starting in January. Thirty states have opted in so far, with a Jan. 1 deadline to join and a Feb. 15 deadline for states to submit lists of approved scholarship organizations to the IRS.

Treasury officials say states cannot exclude scholarship organizations that meet federal requirements, even as several Democratic governors have refused to participate and others, including in North Carolina and Kansas, saw vetoes overridden by Republican legislatures. Treasury estimates about 95% of American children live in households under the income cap, while the Education Department pegs eligible children in participating states at roughly 28 million. By 2030, Treasury projects up to 700 scholarship organizations handling nearly $26 billion in contributions and 2.2 million scholarships annually.

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