The U.S. Department of the Treasury issued guidance Thursday for states, scholarship-granting organizations and taxpayers ahead of a federal K-12 scholarship tax credit program's January start, according to the Ohio Capital Journal.
The Education Freedom Tax Credit program, established under President Donald Trump's 2025 tax and spending law, permits individuals to claim a dollar-for-dollar federal credit of as much as $1,700 for donations to certain scholarship-granting organizations. Married couples filing jointly may claim a combined $3,400. The cap applies to the donor credit rather than the scholarship amount, and donors may give to an eligible organization regardless of their residence.
Contributions are intended to fund K-12 scholarships, mostly at private schools, though they may also cover tutoring, books, supplies, extended-day programs and disability services for students who stay in public schools.
Thirty states have joined, per the Internal Revenue Service. States must opt in by Jan. 1 and submit organization lists by Feb. 15. A Treasury official said states cannot selectively exclude organizations meeting federal requirements.
Scholarships may go to students from households earning up to 300% of an area's median income. Treasury officials said roughly 95% of American children fall under that threshold, and Education Department officials estimated about 28 million children across participating states could be eligible.
Organizations must be 501(c)(3) nonprofits, undergo annual audits, spend at least 90% of income on scholarships, serve no fewer than 10 students not all at one school, verify household income and family size, and prioritize prior recipients and their siblings.