Federal Scholarship Tax Credit Program

A federal initiative designed to make K–12 education more affordable and accessible for families across the United States by encouraging individual taxpayers to contribute to qualified Scholarship Granting Organizations (SGOs), which in turn provide scholarships to eligible students.

Key Details

• Funding Source: 100% federally funded (not state of Kentucky)
• Geographic Scope: United States; Kentucky participation subject to annual state election
• Student Eligibility: All K–12 students, public or private
• Program Status: Effective for donations made on or after January 1, 2027
• No state cost or program cap on total credits
• No program expiration date

Allowable Expenses

Scholarships can cover a broad range of K–12 educational costs, similar to those permitted under 529 education savings accounts:

• Tuition and school fees
• Books and learning materials
• Classroom supplies and equipment
• Tutoring or special-needs services
• Computers, tablets, and technology
• Internet access for learning
• School uniforms and required attire
• Transportation to and from school

SGO Requirements

• Must be a 501(c)(3) nonprofit based in the same state as the students it serves
• Must spend at least 90% of contributions on scholarships
• Must provide scholarships to at least 10 students who do not all attend the same school
• Must verify household income for every applicant
• Must maintain separate accounting for scholarship funds
• Must apply for and maintain annual approval to operate under the program

Implementation Timeline

• Program officially begins with donations made on or after January 1, 2027
• SGOs must apply for approval once federal program is active
• Students and families will begin applying for scholarships through approved SGOs once funds are available

State Participation

• Each state must elect annually to participate
• Election made by Governor or designated state official
• Kentucky participation requires state election by authorized official
• Participating states must maintain current list of approved SGOs and submit annually to U.S. Department of the Treasury

Governance

• Governed by federal law, not state education departments
• Focus on transparency, accountability, and accessibility

Contact

EdChoice Kentucky

• Website: edchoiceky.com
• Contact available through website

How to Apply

For Students & Families:

1. Check eligibility through EdChoice Kentucky website
2. Find an approved Scholarship Granting Organization (SGO) in your area
3. Apply for scholarships through approved SGO once funds are available
4. Provide household income verification for every applicant

For Donors:

1. Wait for federal program activation (donations effective January 1, 2027 or later)
2. Make contributions to qualified SGOs once program is active
3. Claim federal tax credit on tax return

For Schools & SGOs:

1. Apply for annual approval to operate under the program
2. Maintain 501(c)(3) nonprofit status based in participating state
3. Ensure compliance with core SGO requirements
4. Submit to state oversight and annual Treasury reporting

Resources Available

• Eligibility checker on website
• School finder tool
• FAQ pages for families, donors, and SGOs
• Newsletter signup for program updates