EFTC in Kentucky
Kentucky is participating in the federal Educational Choice for Children Act scholarship program. Also known as the Federal Scholarship Tax Credit (FSTC), the program was enacted as IRC §25F and takes effect January 1, 2027.
- Governor
- Andy Beshear
- Democrat
- Status
- Opted in
- As of 2026-03-17
- Program begins
- January 1, 2027
- Federal tax credit live
What EFTC means for Kentucky
Because Governor Andy Beshear has opted Kentucky into EFTC, families in Kentucky will be eligible for scholarships funded through the program when it goes live on January 1, 2027. Designated Scholarship Granting Organizations (SGOs) in Kentucky will receive donations from federal taxpayers and distribute them as scholarships to qualifying K-12 students.
Donors in Kentucky, and anywhere else in the country, can claim a federal income tax credit of up to $1,700 per tax return for contributions to a qualifying SGO, beginning January 2027. The credit is non-refundable and capped, but it lets taxpayers redirect federal income tax that would otherwise go to the U.S. Treasury into scholarships for students in their own community.
Kentucky's participation means federal tax dollars contributed by Kentucky residents stay in Kentucky, supporting families here rather than flowing to scholarship organizations in other states.
Frequently asked questions about EFTC in Kentucky
Does Kentucky participate in EFTC?
Yes. Governor Andy Beshear has opted Kentucky into the program (decision: 2026-03-17), making Kentucky families eligible for scholarships when the program begins on January 1, 2027.
Who is the governor of Kentucky and what is their position on EFTC?
Governor Andy Beshear (Democrat) has opted the state in. Beshear vetoed HB 1; legislature overrode the veto the next day. HB 1 assigns the annual §25F election to the Secretary of State (not the governor), so the filing does not depend on the governor's cooperation.
Can Kentucky residents donate to an SGO and claim the federal tax credit?
Beginning January 1, 2027, any U.S. taxpayer can claim a federal income tax credit of up to $1,700 per tax return for donations to a qualifying Scholarship Granting Organization, regardless of the state they live in. Kentucky residents can give to SGOs in Kentucky and the scholarships will fund Kentucky students.
When does the EFTC program begin?
The Educational Choice for Children Act program begins on January 1, 2027. Donations made on or after that date are eligible for the federal tax credit. Each participating state's governor must submit a list of qualifying Scholarship Granting Organizations to the U.S. Treasury by January 1 of each participating year.
Becoming an SGO in Kentucky
To operate as a Scholarship Granting Organization (SGO) in Kentucky under the federal Education Freedom Tax Credit, an organization must meet the §25F requirements that apply in every participating state, plus anything Kentucky adds on top. Here is the current picture.
How Kentucky opted in: House Bill 1 (2026), enacted over Gov. Beshear's veto and codified in KRS Chapter 14; the General Assembly designated itself to make the election
Federal requirements (apply in every state)
- Be a 501(c)(3) nonprofit that is not classified as a private foundation.
- Spend at least 90% of the income you receive on scholarships, the remaining 10% is the only budget for all administration, including fundraising.
- Award scholarships to 10 or more students who attend more than one school.
- Do not earmark or reserve contributions for a specific, named student.
- Serve students in households at or below 300% of area median gross income.
- Appear on your state's certified SGO list, which the state submits to the U.S. Treasury.
Kentucky-specific requirements
- The Secretary of State collects a fee from SGOs (amount set by regulation) to cover the program's administrative costs.
Kentucky is unusual: the Secretary of State, not the governor or the revenue department, is the sole official who reports the election and submits the SGO list (by January 1 each year). Kentucky has not yet completed its formal IRS advance election. Watch the Secretary of State's office, not the governor's, for the application process.
Sources: Kentucky Acts Chapter 4 (2026 RS): enacted text of HB 1; Kentucky Legislative Research Commission: HB 1 (2026 RS) record
Full walkthrough: how to start an SGO. The intake, income verification, receipting, and disbursement a compliant program needs can run on software built specifically for the §25F workflow.
Scholarship Granting Organizations in Kentucky
Our directory tracks the Scholarship Granting Organizations running today’s state tax-credit scholarship programs, the organizations most likely to administer the federal EFTC once official §25F lists are certified.
Browse the national SGO directory →Other states with the same status
States that have also opted in.
Recent Kentucky EFTC / FSTC news
Coverage of Kentucky’s Federal Scholarship Tax Credit decisions and developments.
- State action · July 7, 2026Kansas completes its federal §25F election: the IRS roster grows to 29, and Kentucky is now the last override state waiting to file
- Analysis · June 4, 2026Three governors vetoed, three legislatures overrode: the veto path into §25F
- State action · March 17, 2026In Kentucky, the official who decides which SGOs qualify is not the governor. It is the Secretary of State.
- State action · March 17, 2026Kentucky legislature overrides Gov. Beshear's veto of FSTC opt-in bill
Learn more about EFTC
In-depth guides on how the program works, who qualifies, and how to participate.
- The real obstacle isn't politics, it's adoptionOnce a state opts in and the program is live, the question that decides whether the Education Freedom Tax Cred…
- Get the credit in your paycheck, not the refundMost people assume a January 2027 donation means waiting until the April 2028 refund to see the $1,700 back, r…
- The CPA's guide to §25FA practitioner's reference to IRC §25F (the EFTC / ECCA / FSTC): the $1,700 dollar-for-dollar credit, why it w…
- Year-end planning: which December mattersThe Education Freedom Tax Credit takes effect January 1, 2027, which turns the usual year-end playbook upside …
- The EFTC, explained for your communityA plain-language, forward-it-to-anyone explainer of the new federal scholarship tax credit: what it is (up to …
- Designating your gift to a schoolSection 25F bans earmarking a donation for any particular student, and that ban is exactly as wide as it sound…
Thank Governor Beshear for opting Kentucky in
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