Programs that help with education costs change often, and many are easy to confuse. This page explains what’s available and who each program actually helps. We’ll update it as rules are finalized.
Featured: The Federal Education Freedom Tax Credit (begins January 1, 2027)
What it is: A new federal income tax credit, created in Section 25F of the tax code by the One Big Beautiful Bill Act (signed July 4, 2025). The IRS calls it the Federal Scholarship Tax Credit.
The most important thing to understand: This credit is for donors, not for parents’ own school expenses.
- A donor gives cash to an approved Scholarship Granting Organization (SGO) and claims a federal tax credit of up to $1,700 per taxpayer per year. A married couple filing jointly can claim up to $3,400.
- The SGO uses the donations to award scholarships to eligible K–12 students.
- Parents don’t claim the credit to cover their own child’s tuition or supplies. The government doesn’t send money to families. Families can apply to an SGO for a scholarship.
Credit vs. deduction: A deduction lowers the income you’re taxed on. A credit lowers the tax itself, dollar for dollar. This is a credit, and it is nonrefundable: it can reduce a donor’s federal tax to zero but won’t pay out more. Unused credit carries forward up to five years. Only cash gifts made on or after January 1, 2027 count.
Who can receive a scholarship: A student who:
- lives in a state that has opted in,
- is eligible to enroll in a public school, and
- lives in a household with income at or below 300% of the area median income.
Treasury estimates that limit covers about 96% of children in participating states. Eligibility doesn’t guarantee an award. SGOs choose recipients, and by law they give priority to returning scholarship students and their siblings.
What scholarships can pay for: The law uses the same K–12 expense list as Coverdell education savings accounts. That includes:
- tuition and fees
- tutoring
- special needs services
- books, supplies, and equipment
- school-required uniforms, transportation, and extended-day programs
- computer technology and internet access used during school years
Scholarships can be used for public, private, or religious school students. Final IRS guidance on qualified expenses, and on what counts as a “school,” is still pending. That guidance matters especially for homeschool and independent study. Each SGO will also set its own policies.
Which states participate: As of October 22, 2026, the IRS lists 30 participating states. New York has announced it will join.
California: As of November 4, 2026, California has not opted in.
- Californians can still donate to an SGO in a participating state and claim the federal credit.
- California students cannot receive scholarships from this program unless the state opts in. States submit their 2027 SGO lists by February 15, 2027, and decide again each year.
How it differs from state programs: Some states fund education accounts directly from the state budget. Texas’s Education Freedom Accounts are an example. The federal credit is different. It is funded by private donations that donors offset against their federal taxes, and no state appropriation is involved.
Read more: Full guide on the blog →
Printable: Federal Tax Credit Quick Sheet (one-page PDF)
Other places to look for help with costs
- Private school financial aid and school-based scholarships: Ask each school directly about its process and deadlines.
- Coverdell ESAs and 529 plans: Tax-advantaged savings accounts that can be used for some K–12 costs. The rules differ, so consult a tax professional.
- Public options at no tuition cost: District schools, charters, and independent study.
- Special education services: Public schools must evaluate and serve eligible students. Learn more through your state’s Parent Training and Information Center.
General information only, not tax or legal advice.
