The 2027 federal scholarship tax credit, for families
Starting in 2027, private scholarship organizations in participating states can give K-12 scholarships paid for by donors who get a federal tax credit. Here's who qualifies and what the scholarships cover.
30 states are in, per the IRS list as of September 14, 2026 (checked Oct 15, 2026). Not tax advice.
Who can get a scholarship?
- An eligible student is one who can enroll in a public elementary or secondary school and whose household income for the prior year is no more than 300 percent of the area median gross income. The SGO verifies household income and family size.1
What can the scholarships pay for?
- Qualified expenses are the ones defined in 26 U.S.C. 530(b)(3)(A). The first group: tuition, fees, academic tutoring, special needs services for a special needs student, books, supplies and other equipment, incurred in connection with the student's enrollment or attendance at a public, private or religious elementary or secondary school.2
- Second: room and board, uniforms, transportation, and supplementary items and services (including extended day programs) that the school requires or provides in connection with enrollment or attendance.2
- Third: computer technology or equipment, internet access and related services used by the student and family during the school years. Software for sports, games or hobbies doesn't count unless it's mainly educational.2
How do families get one?
- A state only takes part if it elects to: the Governor (or whoever state law designates) gives the IRS a list of qualifying SGOs located in the state, by January 1 of each year. Contributions must fund scholarships solely within the state where the SGO is listed.4
- It can't earmark contributions for a particular student. It gives priority to last year's recipients, then to their siblings, and can't award scholarships to disqualified persons (rules like those for private foundations' insiders).5
- Scholarships the students receive from an SGO for qualified expenses are excluded from the family's gross income, for amounts received after December 31, 2026.3
Questions
Who can get a scholarship?
A student who can enroll in a public elementary or secondary school, in a household whose prior-year income is no more than 300% of the area median gross income. The scholarship organization verifies income and family size.
Is the scholarship taxable?
No. Scholarships received from an SGO for qualified expenses after December 31, 2026 are excluded from the family's gross income.
Where do I apply?
With a scholarship granting organization (SGO) on your state's list. Participating states send their lists to the IRS by January 1 each year, and contributions fund scholarships only in that state.
Does this replace my state's ESA?
No. It's a separate federal program run through private scholarship organizations. In some states families may be able to use both.
Looking for help you can use now? Try the program finder for your state's ESA or scholarship. Giving instead? See what a gift is worth.
Sources
- 1. Public Law 119-21, sec. 70411 (26 U.S.C. 25F and 139K), Library of Congress (enrolled law), p. 145, updated Jul 4, 2025
- 2. 26 U.S.C. 530(b)(3): qualified elementary and secondary education expenses, U.S. Government Publishing Office (govinfo), updated Oct 10, 2026
- 3. Public Law 119-21, sec. 70411 (26 U.S.C. 25F and 139K), Library of Congress (enrolled law), p. 148, updated Jul 4, 2025
- 4. Public Law 119-21, sec. 70411 (26 U.S.C. 25F and 139K), Library of Congress (enrolled law), p. 147, updated Jul 4, 2025
- 5. Public Law 119-21, sec. 70411 (26 U.S.C. 25F and 139K), Library of Congress (enrolled law), p. 146, updated Jul 4, 2025