EFTC in North Carolina
North Carolina 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
- Josh Stein
- Democrat
- Status
- Opted in
- As of 2026-06-03
- Program begins
- January 1, 2027
- Federal tax credit live
What EFTC means for North Carolina
Because Governor Josh Stein has opted North Carolina into EFTC, families in North Carolina will be eligible for scholarships funded through the program when it goes live on January 1, 2027. Designated Scholarship Granting Organizations (SGOs) in North Carolina will receive donations from federal taxpayers and distribute them as scholarships to qualifying K-12 students.
Donors in North Carolina, 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.
North Carolina's participation means federal tax dollars contributed by North Carolina residents stay in North Carolina, supporting families here rather than flowing to scholarship organizations in other states.
Frequently asked questions about EFTC in North Carolina
Does North Carolina participate in EFTC?
Yes. Governor Josh Stein has opted North Carolina into the program (decision: 2026-06-03), making North Carolina families eligible for scholarships when the program begins on January 1, 2027.
Who is the governor of North Carolina and what is their position on EFTC?
Governor Josh Stein (Democrat) has opted the state in. Stein vetoed HB 87; the House overrode on May 20, 2026 and the Senate completed the override 30-19 along party lines on June 3, 2026, enacting the bill over the governor's objection. North Carolina is now opted in via legislative override (no gubernatorial action required).
Can North Carolina 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. North Carolina residents can give to SGOs in North Carolina and the scholarships will fund North Carolina 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 North Carolina
To operate as a Scholarship Granting Organization (SGO) in North Carolina under the federal Education Freedom Tax Credit, an organization must meet the §25F requirements that apply in every participating state, plus anything North Carolina adds on top. Here is the current picture.
How North Carolina opted in: Legislative veto override of HB 87 over Gov. Stein (June 3, 2026)
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.
North Carolina-specific requirements
North Carolina has not published SGO requirements beyond the federal rules yet. Certification mechanics are gated on Treasury’s proposed §25F regulations, expected by the end of September 2026, so watch for North Carolina’s application window to open after that.
North Carolina opted in by veto override; implementation details in HB 87 are not yet operational and no certifying office has published criteria.
Sources: Ballotpedia News: North Carolina overrides veto, opts into the federal credit
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 North Carolina
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 North Carolina EFTC / FSTC news
Coverage of North Carolina’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
- State action · June 5, 2026After the override, NC's Stein pivots: a Democratic governor's plan to steer §25F donations to public-school students
- Analysis · June 4, 2026Three governors vetoed, three legislatures overrode: the veto path into §25F
- State action · June 3, 2026North Carolina Senate completes veto override, NC opts into the federal Scholarship Tax Credit
- State action · May 20, 2026North Carolina House overrides Gov. Stein's veto of FSTC opt-in bill (HB 87)
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 Stein for opting North Carolina in
A short note of thanks from a constituent goes a long way, and reinforces that participation matters to families in your state.
Contact Governor Stein →
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