Education Freedom Tax Credit

The EFTC, created by the Educational Choice for Children Act (signed July 4, 2025), provides a federal tax credit for cash donations to approved Scholarship Granting Organizations (SGOs). It creates a new, permanent funding stream for K-12 education choice.

Donors can claim a federal tax credit of up to $1,700 per return for cash contributions to an SGO. The credit is nonrefundable, so it reduces your federal tax to zero but not below, and any unused amount carries forward up to 5 years. Contributions must be cash, not stock or property. Final figures are pending Treasury regulations.

The governor signs an executive order or the state legislature passes enabling legislation. Once opted in, the state can designate Scholarship Granting Organizations to distribute EFTC funds.

Families with household income at or below 300% of the area median income qualify. The threshold is set per county from HUD income data, so it varies by where a family lives.

EFTC scholarships cover a defined list of K-12 expenses under IRC Section 530(b)(3), including tuition, fees, tutoring, books, supplies, technology, and special needs services. See the full list of confirmed eligible expenses and pending Treasury guidance on our Eligible Expenses page.

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