Learn the EFTC
The Education Freedom Tax Credit (EFTC) is the first federal tax credit scholarship program in U.S. history. It begins January 1, 2027. Choose your track below, whether you’re learning about the program or running a scholarship organization.
Understanding EFTC
How the Education Freedom Tax Credit works, who qualifies for scholarships, and how families and donors participate.
- VIDEOAdvocates, SGO operators, donors, journalists, and policymakers
The real obstacle isn't politics, it's adoption
Once a state opts in and the program is live, the question that decides whether the Education Freedom Tax Credit works isn't political, it's whether ordinary taxpayers actually claim a credit that pays them back dollar-for-dollar. History says free money gets left on the table: workers skip employer 401(k) matches, and the no-cost presidential campaign checkoff fell from 29% participation to about 4%. The four frictions that suppress uptake (awareness, paperwork, cash-flow timing, and trust), why each one is fixable, and why adoption is won at the operator layer, not in the political fight.
Read · 8 min - VIDEODonors, employees, and their tax advisors
Get the credit in your paycheck, not the refund
Most people assume a January 2027 donation means waiting until the April 2028 refund to see the $1,700 back, roughly 16 months. It doesn't have to. The §25F credit is earned in the 2027 tax year, and federal withholding is adjustable in real time: with a corrected Form W-4, you recover the credit across your 2027 paychecks instead of lending it to the IRS interest-free. How the paycheck route works, why it's fully allowed (the W-4 is built to account for credits), the three guardrails that keep it clean (you need the tax liability, you must actually make the gift, and the timing rules), and a step-by-step for donors and their accountants.
Read · 7 min - VIDEOCPAs, enrolled agents, and tax advisors
The CPA's guide to §25F
A practitioner's reference to IRC §25F (the EFTC / ECCA / FSTC): the $1,700 dollar-for-dollar credit, why it works for standard-deduction clients, the §25F(e) double-benefit bar, the §25F(b)(2) state-credit reduction, the 5-year FIFO carryforward, the unsettled married-filing-jointly cap, the unique donor number, how to verify an SGO is on a state's list, and year-end planning pointers, every rule cited to the statute.
Read · 9 min - VIDEODonors and their advisors planning charitable gifts
Year-end planning: which December matters
The Education Freedom Tax Credit takes effect January 1, 2027, which turns the usual year-end playbook upside down for one transition year: a cash gift to an SGO in December 2026 earns no federal credit, while the identical gift three weeks later comes back dollar-for-dollar, up to $1,700. What a 2026 gift is still worth (the §170 deduction, state scholarship credits), why December 31, 2027 becomes the first real EFTC deadline, the cash-only rule, the no-double-benefit rule, the five-year carryforward, the paperwork to keep, and a planning checklist by calendar.
Read · 7 min - VIDEOParents, community members, and anyone sharing the program
The EFTC, explained for your community
A plain-language, forward-it-to-anyone explainer of the new federal scholarship tax credit: what it is (up to $1,700 off your federal taxes, dollar for dollar, for donating to a scholarship organization), when it starts (January 1, 2027), who qualifies, how to check your state, the four steps to actually do it, whether you can support your own school, and the honest fine print. Written for parent lists, congregation emails, and community group chats.
Read · 5 min - VIDEODonors, schools, and SGO operators
Designating your gift to a school
Section 25F bans earmarking a donation for any particular student, and that ban is exactly as wide as it sounds: student-level, not school-level. Directing a gift toward a specific partner school's scholarship fund is permitted under the statute as written and is standard practice in state scholarship-credit programs. What donors can and cannot designate, the award rules the SGO must still follow, and what Treasury has and hasn't said.
Read · 6 min - VIDEOPublic-school families, advocates, journalists, and SGO founders
EFTC and public-school students
The Education Freedom Tax Credit (§25F) is often described as a private-school program, but its eligibility is student-based, not school-based, and it defines qualified expenses by reference to the IRC §530(b)(3)(A) Coverdell list, which covers academic tutoring, special-needs services, books, technology, and test fees. That means a public-school student from a qualifying household can, in principle, receive scholarship support. What the statute permits, what happens in practice today, and the honest limits.
Read · 7 min - VIDEODonors, tax advisors, SGO founders and operators
The §25F donor number
Treasury's June 2026 preview describes a unique donor number for the federal Education Freedom Tax Credit (§25F): the Scholarship Granting Organization issues each donor a number on a written acknowledgment, reports contributions to the IRS under it, and the donor reports it on their federal return, so the IRS can match a claimed credit to a real donor and a real SGO without the donor ever handing the SGO a Social Security number. What the number is, how it flows, and what it means for donors and SGO operators.
Read · 7 min - VIDEOAnyone new to the program, donors, families, schools, operators
What is the Education Freedom Tax Credit?
The Education Freedom Tax Credit (EFTC) is the new federal tax credit for donations to K-12 scholarship organizations, worth up to $1,700 and starting January 1, 2027. What the credit does, where the name comes from, what it means for donors, families, schools and scholarship organizations, and where each state stands.
Read · 7 min - VIDEOTaxpayers, CPAs, tax advisors, anyone researching the IRS term
What is the Federal Scholarship Tax Credit?
Federal Scholarship Tax Credit (FSTC) is the term the IRS uses for the federal K-12 scholarship donation credit at IRC §25F. What the credit is, why the IRS uses this name, how it behaves as a tax item (non-refundable, five-year carryforward, cash only, no double benefit), and what tax professionals need to know before the 2027 tax year.
Read · 6 min - VIDEOAnyone new to the program, parents, donors, educators, advocates
What is ECCA?
A complete guide to the Educational Choice for Children Act (ECCA), also known as the Federal Scholarship Tax Credit (FSTC) and codified at IRC §25F. How the federal scholarship tax credit works, who qualifies, when it begins, and what state participation means.
Read · 8 min - VIDEODonors, taxpayers, accountants
The federal tax credit, explained
How the Education Freedom Tax Credit (EFTC / §25F) works for donors: $1,700 per tax return, 5-year carryforward, non-refundable, cash only, no double-deduction with §170, plus worked examples.
Read · 8 min - VIDEOParents and guardians of K-12 students
Scholarship eligibility
Which K-12 students qualify for EFTC scholarships, the income limits, what schools and educational expenses are covered, and how families apply through a Scholarship Granting Organization (SGO).
Read · 7 min - VIDEOAdvocates, voters, legislators, journalists, and state officials
When a state opts out, the money leaves
The Education Freedom Tax Credit is federal, so residents can claim the $1,700 credit whether or not their state opts in, but scholarships only reach students in participating states. Opt out, and your residents fund students elsewhere. The math, the stakes, and why opting in costs the state nothing.
Read · 6 min - VIDEOAdvocates, voters, legislators, journalists
How states opt in
How a state opts in to the federal EFTC scholarship program: the governor's annual Treasury submission, legislative vs. executive paths, what citizens can do to advocate, and what happens when a state doesn't participate.
Read · 8 min - VIDEOParents of K-12 students with disabilities or IEPs
EFTC for special-needs families
How families of K-12 students with disabilities can use EFTC scholarships to fund therapies, specialized instruction, evaluations, and assistive technology, plus how SGOs prioritize special-education needs.
Read · 6 min - VIDEOHomeschool, microschool, hybrid-school families
EFTC for homeschool & microschool
How homeschoolers, microschool families, learning pods, and hybrid-school families can use EFTC scholarships, what expenses qualify, and how to find an SGO that supports your educational model.
Read · 6 min - VIDEOHomeschool families, SGOs, policy advocates, journalists
Homeschool eligibility by state
Every K-12 child is an eligible student under the federal Education Freedom Tax Credit (EFTC / §25F). But the scholarship can only pay for a “school,” and the law sends that word back to each state. An interactive 50-state + DC map: where homeschoolers can use the scholarship, where they can’t, and the 29 states where it comes down to one box on a form.
Read · 6 min - VIDEODonors and families in states with their own scholarship credits
EFTC vs. state scholarship tax credits
How the federal EFTC tax credit compares to existing state-level scholarship tax credit programs, whether donors can stack the two, and what families should know about each.
Read · 6 min - VIDEOFamilies and donors weighing K-12 education funding options
EFTC vs. 529 plans & ESAs
The Education Freedom Tax Credit (EFTC / §25F), 529 plans, and Coverdell ESAs are three different federal K-12 tax benefits, and the same 2025 law (the One Big Beautiful Bill) both created the EFTC and expanded 529 plans. How each one works, who it's for, and how one family can use more than one.
Read · 7 min - VIDEOAnyone confused by the program's many names
One program, four names
EFTC, FSTC, ECCA and §25F all name the same federal K-12 scholarship tax credit. Advocacy groups say EFTC, the IRS says FSTC, Congress passed it as ECCA, and tax professionals cite §25F. Which name to use, who uses which, and how to tell they are the same thing.
Read · 4 min - VIDEODonors, families, SGOs, and advocates tracking the rollout
EFTC timeline & key dates
A dated roadmap of the federal Education Freedom Tax Credit (EFTC / ECCA / §25F): when it was enacted, when states make the advance election and submit SGO lists, when donations begin counting, and when donors claim the first credits.
Read · 6 min - VIDEOPrivate, faith-based, and independent school leaders
EFTC for private & faith-based schools
How private, religious, and independent K-12 schools can benefit from the Education Freedom Tax Credit (EFTC / ECCA / §25F): how scholarship dollars reach your school through SGOs, what families need to qualify, and how to prepare for the January 2027 launch.
Read · 7 min - VIDEOFamilies, donors, advocates
SGO scholarships vs. ESAs vs. vouchers
The three main ways policy funds private education, tax-credit scholarships from SGOs (including the federal §25F / EFTC), education savings accounts (ESAs), and vouchers, compared on who funds them, who holds the money, eligibility, and how the federal credit fits and stacks.
Read · 8 min - VIDEODonors, SGO operators, tax advisors
The federal SGO list
For a donation to earn the §25F credit, the scholarship granting organization must be on the list its state submits to the federal government. How an organization gets on that list, what makes it a qualifying SGO, why the IRS list can run behind a state's own roster, and how a donor confirms an organization qualifies before giving.
Read · 7 min - VIDEOFamilies, donors, schools, SGO operators
Qualified expenses
§25F does not define its own expense list. It borrows the Coverdell education savings account list at IRC §530(b)(3), which reaches far beyond private-school tuition: tutoring, books, curriculum, technology, testing fees, and services for students with disabilities. What a §25F scholarship can and cannot be spent on, and why the answer is broader than most people assume.
Read · 7 min
Running an SGO
What it takes to become a designated Scholarship Granting Organization, from formation to compliance to operations.
- VIDEONonprofits, schools, donors, families
Scholarship Granting Organizations
What an SGO is, how organizations get designated by their state, the 90/10 rule, what compliance looks like, and how donors and families choose between SGOs.
Read · 6 min - VIDEOFirst-time founders, nonprofit leaders, schools, community groups
How to start an SGO
The complete, start-from-nothing guide to launching a Scholarship Granting Organization (SGO) for the federal Education Freedom Tax Credit (EFTC / ECCA / §25F): incorporating a nonprofit, getting an EIN, filing for 501(c)(3) (Form 1023 vs 1023-EZ, real fees and timelines), opening the required separate bank accounts, registering to fundraise, meeting every §25F operating rule, getting on your state's list, and a step-by-step checklist, written for founders with zero nonprofit experience.
Read · 16 min - VIDEOSGO operators, boards, nonprofit finance and compliance staff
The 90/10 rule & SGO compliance
A deep dive into the federal §25F rules every Scholarship Granting Organization must meet: the 90% income-to-scholarships requirement and 10% administrative cap, the 10-student rule, renewal and sibling priority, anti-earmarking, the self-dealing prohibition, separate-account rules, donor substantiation, and income verification.
Read · 9 min - VIDEOSGO founders and operators, donors, advisors, state officials
The proposed regulations, previewed
Treasury says the §25F (EFTC / FSTC) proposed regulations arrive by the end of September 2026 — and previewed their content: the 90% segregated-account safe harbor, the multistate SGO path, income-verification safe harbors, annual audits, unique donor numbers, and an IRS portal. A practical walkthrough of each item.
Read · 10 min - VIDEOSGO founders, operators, boards, nonprofit finance staff
SGO software
What SGO software does and why the federal §25F 90/10 rule makes it essential: donor onboarding and identity verification, payment processing, per-donor §25F receipts, family applications and income verification, an award engine with renewal and sibling priority, separate-account fund accounting, state reporting, and an audit trail. A buyer's checklist, a build-vs-buy guide, and the four buying-decision questions, pricing model, fund custody, disbursement controls, and data portability, to ask any vendor before you sign.
Read · 11 min - VIDEOSGO operators, boards, nonprofit finance and compliance staff
SGO compliance calendar
A milestone-by-milestone view of what a Scholarship Granting Organization must do to stay compliant with §25F: state list timing, the 90/10 test, annual third-party audits, donor acknowledgments and unique donor numbers, separate-account rules, and yearly renewals.
Read · 8 min - VIDEOSGO operators, boards, nonprofit finance staff
Disbursing scholarship funds
Money-out is the hardest part of running a Scholarship Granting Organization. How funds move from the SGO to a school or family once a scholarship is awarded, why scholarship money must never touch operating accounts, the record every disbursement needs, ACH versus check, and the controls that keep a disbursement audit-clean.
Read · 8 min - VIDEOSGO operators, program staff, boards
Income verification
Every §25F scholarship goes to a household at or below 300% of area median gross income, and the SGO is responsible for confirming it. What area median gross income means, what documents establish a household's income, how to size the check to the family rather than over-collect, and how to keep verification records that survive an audit.
Read · 8 min - VIDEOSGO founders, operators, boards, development staff
Recruiting donors
A §25F scholarship organization runs on donations, and the credit changes the pitch: a donor is redirecting up to $1,700 of federal tax they already owe, not writing a check they will not see again. Who your donors are, the dollar-for-dollar message that actually lands, the 10% cap that limits what you can spend to find them, and a first-year acquisition plan.
Read · 8 min - VIDEOExisting state-program SGO operators, donors, advisors
State programs and the EFTC
Long before the federal Education Freedom Tax Credit, states ran their own tax-credit scholarship programs, Arizona, Florida, Pennsylvania, Indiana, Ohio, Georgia, Iowa and more. How those state programs work, how the new federal §25F credit interacts with them, whether a donor can use both, and what an organization already running a state program needs to know to add the federal layer.
Read · 9 min
Run your SGO on SGO Software
Manage donors, scholarships, and §25F compliance in one place, built for the credit from day one.
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