Questions about the Education Freedom Tax Credit

The credit

• What is the Education Freedom Tax Credit?

  A federal tax credit, Internal Revenue Code section 25F, for cash gifts to approved Scholarship Granting Organizations (SGOs), which award K-12 scholarships to eligible students. It is the first federal school-choice tax credit; state programs have existed for years. It is also called the Federal Scholarship Tax Credit.

• Where did it come from?

  It began as the Educational Choice for Children Act, first introduced in Congress in 2022. It became law in July 2025 as section 70411 of Public Law 119-21. Treasury published proposed regulations on October 2, 2026, with comments due December 1, 2026, and temporary regulations that may be relied on from January 1, 2027.

• How is a tax credit different from a deduction?

  A deduction lowers your taxable income. A credit lowers your tax bill dollar for dollar. This is a nonrefundable credit: it offsets federal income tax you owe, up to $1,700 per taxpayer or $3,400 for a married couple filing jointly, and any unused amount carries forward up to five years. The same gift cannot also be deducted as a charitable contribution, and if you claim a state tax credit for the same gift, the federal credit is reduced by that amount.

  Whether and how this applies to you depends on your own tax situation. Consult your tax advisor.

• Do I need to itemize to claim the credit?

  No. You claim the credit on Form 8525 whether you itemize or take the standard deduction. If you give more than the credit covers, the extra may be deductible as a charitable gift if you itemize.

• Is this a voucher program?

  No public money is appropriated or transferred. The credit works through the tax code: a private donor gives to a nonprofit SGO, which awards a scholarship. Supporters call it a tax-credit scholarship; some critics describe it as similar in effect to a voucher because it reduces federal revenue. Both descriptions are in public use.

For donors

• Who qualifies for the Education Freedom Tax Credit?

  Individual taxpayers who are U.S. citizens or residents. Corporations and other business entities cannot claim it.

• How do I claim the Education Freedom Tax Credit?

  When you give, our checkout marks your gift as a qualified contribution, which the rules require at the time you give. By January 31 of the next year, we send you a written acknowledgment with our EIN, your donor number and the total you gave. When you file your federal return, you complete IRS Form 8525 and enter that donor number. A gift made in 2027 is claimed on your 2027 return, filed in 2028. These are the IRS proposed rules of October 2, 2026, and they may change before they are final.

• How much can I give, and does the credit roll over?

  Up to $1,700 per taxpayer per year. A married couple filing jointly can claim up to $3,400 if each spouse gives $1,700, under the IRS proposed rules of October 2, 2026. Unused credit carries forward for up to five additional years.

• Do I have to give at a specific time, or all at once?

  No. A contribution qualifies if it is made on or after January 1, 2027 and by the end of the calendar year. You can give in parts through the year.

• Can I donate stock or other property?

  No. Only cash contributions qualify for the federal credit.

• Does my state need to participate for me to claim the credit?

  No. What matters is the state the SGO is listed in, not where you live. If your state has not opted in, you can give to MyChoice in a participating state and claim the federal credit.

• Can I direct my gift to a specific child or school?

  Federal law prohibits earmarking a contribution for a particular student, and no scholarship may go to a substantial donor, a board member or their family.

• Do I have to wait until I file my taxes to see the benefit?

  The credit is claimed on your federal return for the year of the gift. Some taxpayers adjust their withholding during the year in anticipation of a credit; whether that suits you is a question for your tax advisor.

  Whether and how this applies to you depends on your own tax situation. Consult your tax advisor.

• What will the credit cost me?

  Your gift is offset dollar for dollar by the credit, if you have sufficient federal income tax liability. That means the federal income tax you owe for the whole year, not the amount due when you file. If tax withheld from your pay already covers it, the credit increases your refund. If your liability is lower than the credit, the unused amount carries forward up to five years. Consult your tax advisor about your own situation.

  Whether and how this applies to you depends on your own tax situation. Consult your tax advisor.

For families

• Who qualifies for a scholarship?

  K-12 students from households with income at or below 300% of the area median gross income, a figure the Department of Housing and Urban Development recalculates annually and that MyChoice verifies every year.

• What can the scholarship be used for?

  MyChoice scholarships pay tuition at accredited private K-12 schools in its network, independent or faith-based.

• How and when do I apply?

  Through MyChoice, not the federal government. Applications open in 2027; the date is not set yet. Leave your email on the home page and we will tell you when.

• Is there a cap on how large a scholarship can be?

  There is no federal dollar cap per student. The law requires an SGO to spend at least 90% of its income on scholarships. At MyChoice, 100% of donations go to scholarships.

For schools

• How can my school join the network?

  Accredited private K-12 schools apply to MyChoice and are vetted for financial standing and governance before any scholarship is paid. The application process opens ahead of January 2027. Leave your email on the home page and we will tell you when.

About MyChoice

• Is MyChoice Kids Scholarships a Scholarship Granting Organization?

  Yes. MyChoice is a 501(c)(3) nonprofit organized as a Scholarship Granting Organization under section 25F. The participating states where MyChoice is listed will be published here as each state completes its certification.

• Does MyChoice match donations?

  Yes. MyChoice's philanthropic partners match up to $1,000,000 in donations annually.

• How much of my donation goes to scholarships?

  100%. MyChoice's philanthropic partners cover every operating cost, card fees included. We will publish annual audited financial statements to show it.

• What does an SGO have to do to stay approved?

  Serve at least ten students who do not all attend the same school; spend at least 90% of income on scholarships; limit awards to households at or below 300% of area median income, verified annually; never earmark a gift for a particular student; never award a scholarship to an insider; keep contributions in segregated accounts; file an annual Form 990; and be relisted by its state every year.

Glossary

SGO

Scholarship Granting Organization: the nonprofit that receives donations and awards scholarships. MyChoice Kids Scholarships is one.

EFTC, FSTC

Education Freedom Tax Credit and Federal Scholarship Tax Credit: two names in common use for the same credit, Internal Revenue Code section 25F.

Nonrefundable credit

A credit that reduces the federal income tax you owe. It is not paid out as a refund beyond that. Unused amounts of this credit carry forward up to five years.

AMGI

Area Median Gross Income, a figure the Department of Housing and Urban Development calculates for each area each year. Scholarship eligibility is capped at 300% of it.

Covered state

A state that has opted into the program and filed its certified list of SGOs with the IRS. The list is renewed every year.

STO, SSO, SFO

State programs' names for the same kind of organization: School Tuition Organization (Iowa), Student Scholarship Organization (Georgia), Scholarship Funding Organization (Florida).