Every child is “eligible” for the federal scholarship. In half the states, homeschoolers still can’t spend it.

When Congress created the federal Education Freedom Tax Credit (FSTC / ECCA / §25F) in 2025, the promise was sweeping. Beginning January 1, 2027, any K-12 child eligible to enroll in a public school can receive a scholarship from a Scholarship Granting Organization (SGO), funded dollar-for-dollar by donors who claim a federal credit of up to $1,700. “Every kid is eligible” became the rallying line of the school-choice movement. For homeschool families in roughly half the country, that line is misleading, and the reason is buried in a single statutory cross-reference that almost no one outside a handful of tax lawyers has read.

The credit, codified at Section 25F of the Internal Revenue Code, actually contains two different tests, and home-educated children fall straight through the space between them. The first test asks who is an eligible student, and it is broad: a child qualifies if their household income is at or below 300% of the area median and they are “eligible to enroll in a public elementary or secondary school.” Homeschoolers clear that bar without breaking stride. The second test asks what is a qualified expense, and it is narrow. A scholarship may only pay for a “qualified elementary or secondary education expense,” a term §25F defines not on its own but by pointing to a different statute, IRC §530(b)(3)(A), the rulebook for Coverdell education-savings accounts. And §530 ties every qualifying expense to enrollment or attendance “at a public, private, or religious school,” then defines “school” as one providing K-12 education “as determined under State law.”

Read those two tests together and the trap appears. A homeschooled child can be a perfectly eligible student and still have no qualifying expense to spend the scholarship on, if their state’s law does not treat the home itself as a “school.” There is no separate homeschool category anywhere in §530. Tellingly, the very same 2025 law did amend the §529 college-savings rules to cover homeschool expenses by name, but §25F points to §530, which got no such fix. Anyone who assumes “the new law covers homeschoolers” is reading the wrong section.

This is not a drafting ambiguity that a friendly regulation might quietly read away. On June 10, 2026, the Treasury Department released a preview of its forthcoming §25F guidance that says it plainly: it expects the rules to define “school” consistent with §530 to include public, private, and religious schools providing K-12 education as determined under state law, and “accordingly, a home school would be treated as a school if it is treated as a school under State law.” A Treasury tax-policy official had walked through the identical statutory path at an industry webinar the day before. The written preview removes even the hedge: homeschool access to the federal scholarship now turns entirely on each state’s classification of home education, a question of state law that Washington has expressly declined to override.

The homeschool world has always sorted states by how much paperwork a family must file, light regulation here, heavy regulation there. But that is the wrong axis for this question. What matters for §25F is a different, rarely-asked question: does your state’s law call the home a “school,” or does it route home education through a separate “home instruction” category that is, by design, not a school? We classified all 50 states and the District of Columbia against exactly that test, citing the controlling statute or court decision in each, in our interactive 50-state map. The result is not a tidy half-and-half: 15 states likely qualify, because the home is a “school” under state law (Texas counts a home school as a private school after a 1994 state Supreme Court ruling; Arizona’s statute literally defines “homeschool” as “a nonpublic school”); 23 states plus D.C. likely do not, because home education sits in a separate “home instruction” box the statute deliberately holds apart from a school (Virginia’s statute commands that parent-led home instruction “shall not be classified or defined as a private ... school”); and 12 states are genuinely gray, awaiting Treasury’s separate guidance on which §530 expenses count.

The single most consequential finding: in 29 states, the answer is pathway-dependent. Many states let a family home-educate either by operating as a private school or by filing under a standalone home-education statute. Choose the first box and the child likely qualifies; choose the second and they likely don’t. Same child, same kitchen table, different paragraph of state law. In Alaska, a family that registers as a private school is in; one that uses the parental home-education exemption is out. Most families have no idea the choice carries a federal-scholarship consequence, because until now no one had a reason to ask.

The stakes are not abstract. Some SGOs are already marketing to homeschool families with flat assurances of “no homeschool exclusion,” a claim Treasury’s own preview directly contradicts. For a credit that pays dollar-for-dollar, telling a family the money is theirs when their state’s law won’t let them spend it isn’t a rounding error. It is a promise that breaks at the worst possible moment: after the school year has been planned around it.

Two things could close the gap, and neither is automatic. A state that routes homeschoolers through a non-school “home instruction” statute could amend its definitions to recognize home schools as schools, as 15 states already effectively do, but that is a state legislative fix, fifty separate fights. Or Treasury’s forthcoming §530 expense guidance, a separate workstream the department says will follow the main §25F regulations expected by late September 2026, could read “school” more generously and carve out hybrid arrangements, so that a homeschooler who also enrolls part-time in a co-op or microschool that is a private school keeps a qualifying expense. Until one of those happens, “every kid is eligible” remains true in the narrowest legal sense and false in the way that counts. The least we can do before January 2027 is tell families the truth about their own state, which is exactly what our state-by-state map and our guide to who §25F actually covers are for.