A new federal school choice program is set to launch next year, giving families in participating states another way to help cover education-related expenses.
The Federal Scholarship Tax Credit program is scheduled to begin Jan. 1, 2027. Thirty states have already opted into the program, according to the IRS.
The program will provide scholarships for eligible K-12 students that can be used for a range of education expenses, including private school tuition, academic tutoring, special-needs services, books, supplies, computers and other qualifying costs.
The scholarships will be funded through contributions to approved nonprofit Scholarship Granting Organizations, or SGOs. Participating states will identify organizations that qualify to take part in the program.
Taxpayers who make qualifying cash contributions to those organizations will be able to claim a federal income tax credit of up to $1,700 annually. Under proposed federal regulations, married couples filing jointly could receive a combined credit of up to $3,400.
The amount of an individual student's scholarship will not be limited to $1,700. Scholarship amounts will instead be determined by the organizations distributing the money.
Students generally must be eligible to enroll in a public elementary or secondary school and come from a household earning no more than 300% of the area's median gross income to qualify.
Families can receive scholarships only in states that choose to participate, while taxpayers may contribute to qualifying scholarship organizations in participating states regardless of where the donor lives.
Federal officials estimate the program could eventually support as many as 2.2 million scholarships each year.
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