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Federal Scholarship Tax Credit (FSTC)

 

Find details about the FSTC program for individual taxpayers, states and Scholarship Granting Organizations. 

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About the FSTC

The Federal Scholarship Tax Credit program brings together individual donors, participating states and Scholarship Granting Organizations (SGOs), to expand educational opportunities in the U.S. through qualified scholarship contributions.

Beginning with Jan. 1, 2027, individuals may claim a federal income tax credit up to $1,700 for qualified cash contributions to certain public charities that grant scholarships for qualifying elementary and secondary educational expenses. Married couples filing jointly may each be able to claim a $1,700 credit, for a total credit of $3,400 on the joint return. The program is available only in states that elect to participate and submit approved SGOs to the IRS.

Participating in the FSTC

Find how to participate in the program depending on your role:

States

States and the District of Columbia (state) decide whether to participate in the FSTC program. Taxpayers can’t claim the credit for qualifying donations in a state until that state elects to participate and submits its approved SGOs to the IRS. 

How to participate in the FSTC

To participate, a state must:

  1. Complete and submit Form 15714, Advance Election to Participate under Section 25F for 2027 PDF
  2. Meet state responsibilities to review and certify organizations seeking SGO status and create an annual list of approved SGOs 
  3. Make the election to participate and submit an annual list of SGOs on the FSTC State Portal

State responsibilities

The governor, or an authorized delegate, must review and certify each organization the state includes on its SGO list. The state must confirm that each organization meets Section 25F requirements. This includes that an organization must: 

  • Be tax-exempt under section 501(a) and described in Section 501(c)(3) as a public charity, not a private foundation. The IRS will assist states in assessing this requirement
  • Located in the state
  • Account for scholarship funds and use a segregated account when required
  • Comply with scholarship eligibility requirements

Resources for states

Scholarship Granting Organizations (SGOs)

Section 25F establishes eligibility and ongoing compliance requirements for organizations seeking to qualify as an SGO.

How to qualify

To qualify as an SGO under Section 25F, an organization must 

  • Be recognized as a tax-exempt public charity under IRC Section 501(c)(3), private foundations are not eligible,
  • Meet specific requirements for awarding scholarships, managing contributions, and verifying student eligibility,
  • Ask to be included on a participating state's SGO list and 
  • Provide information to the state needed to establish their eligibility. 

Once qualified, SGOs must meet ongoing financial, recordkeeping, donor acknowledgment, and IRS reporting requirements, including registering and reporting through the FSTC SGO Portal.

Resources for SGOs

Individual taxpayers

The FSTC is a non-refundable tax credit available beginning in tax year 2027. You may be eligible to claim up to $1,700 for qualified cash contributions made during the tax year to an approved Scholarship Granting Organization, or up to $3,400 for married taxpayers filing jointly.

Eligibility

To be eligible for the credit, you must:

  • Make a qualified cash contribution to an approved SGO in a participating state
  • Claim the credit when you file your federal income tax return, subject to applicable limitations.

Note: Check if the organization is an approved SGO and located in a participating state. 

How to claim the FSTC credit

  • Make a qualified cash contribution to an approved SGO. Tell the SGO your payment is a qualified Section 25F contribution.
  • Complete and file Form 8525, Federal Scholarship Tax Credit, listing the required SGO and donor number. 

Individual resources