Arkansas Announces It Will Participate in the Federal §25F Scholarship Tax Credit

On January 16, 2026, Arkansas Governor Sarah Huckabee Sanders (R) announced that Arkansas intends to participate in the new federal tax-credit scholarship program, the §25F Education Freedom Tax Credit created under the One Big Beautiful Bill Act (P.L. 119-21). According to the Governor's Office, the program begins January 1, 2027, and (in the words of the release) “individual taxpayers in Arkansas may now claim a nonrefundable federal tax credit for cash contributions to Scholarship Granting Organizations providing scholarships for elementary and secondary expenses.” The release puts the limit plainly: “Individual taxpayers are limited to $1,700 in credits annually,” which matches the §25F statute (a $1,700 per-taxpayer credit, 100% nonrefundable, regardless of filing status). Sanders framed the move as an extension of Arkansas LEARNS and its Education Freedom Account program, which the office says served more than 44,000 students in the 2025-26 school year.

It is worth being precise about what the announcement is and is not. The Governor's Office release is a statement of intent to participate; it does not reference an IRS advance election, Form 15714, or “covered state” status, and as of late January the public record did not show Arkansas among the states that had formally filed. In its January 27 roundup, Ballotpedia grouped Arkansas with governors who said their states would participate but had not yet formally opted in, while listing Georgia, Idaho, Mississippi, Montana, and Virginia as the states that had filed the IRS advance election in January. Under the §25F framework, states opt in by making that advance election (Form 15714, available for filing on or after January 1, 2026), and the credit goes live January 1, 2027. So Arkansas has signaled it is coming; the documented federal filing is the next step to watch.

Mechanically, §25F routes a dollar-for-dollar federal credit through Scholarship Granting Organizations rather than through the state treasury. A donor gives cash to a qualified SGO, claims the nonrefundable credit (capped at $1,700) on a federal return, and the SGO turns those contributions into K-12 scholarships. The federal rules carry their own guardrails that exist independent of any state program: scholarship eligibility is capped at families earning up to 300% of area median gross income, and SGOs face contribution, distribution, and reporting requirements written into the statute. In Arkansas, Secretary of Education Jacob Oliva was named in the announcement, and the practical work of certifying which organizations qualify will fall to the state once it formally enters. We track Arkansas status and participating organizations on our Arkansas state page, and the full national picture lives on the participation map.

For SGO operators and donors, the takeaway is that a §25F program is a distinct federal track, not a relabeling of the state's LEARNS Education Freedom Accounts. An organization that already grants Arkansas EFA scholarships will still face a build-versus-retrofit decision to meet the federal 300%-of-AMGI means test, the donor crediting and receipting rules, and the reporting §25F demands. Arkansas joins a growing and varied field: some governors have filed the formal IRS election like Virginia, some have acted administratively like Alaska and Florida, and a handful of states have reached the program only after legislatures overrode gubernatorial vetoes. How each state documents its choice is something we explain in our explainers, and you can see the organizations already standing up federal arms in the national SGO directory.

The open questions in Arkansas are sequencing and detail: when the state files (or confirms it has filed) the IRS advance election, whether Oliva's office aligns §25F certification with the existing LEARNS framework or runs it on a separate track, and how soon Arkansas organizations can begin accepting federally creditable donations ahead of the 2027 launch. Founders weighing whether to stand up an Arkansas §25F-eligible SGO can review how these organizations work in our explainers and watch the national rollout in the SGO directory. Because a clean federal program means meeting the means test, donor reporting, and distribution rules from day one, a growing number of operators are choosing to run their programs on software built for §25F rather than retrofitting state-credit tooling.