On June 10, the U.S. Department of the Treasury issued a preview of the forthcoming guidance implementing the Education Freedom Tax Credit (EFTC) scholarship program, which is set to take effect on Jan. 1, 2027. President Donald Trump (R) enacted the tax credit as part of the One Big Beautiful Bill Act (OBBBA). The statute required the Treasury to create regulations to implement the program. Deputy Assistant Secretary for Tax Policy Kevin Salinger said the Treasury would propose regulations in September.
The EFTC is a nonrefundable tax credit, allowing individuals to receive federal tax credits for donations up to $1,700 to authorized scholarship-granting organizations (SGOs). It is a dollar-for-dollar nonrefundable tax credit, meaning individuals can lower their federal tax liability by $1 for every $1 donated to accredited SGOs; if a taxpayer donates more than $1,700, they will not receive a tax refund for the amount over $1,700. The total amount of credits the program can offer is not capped.
SGOs distribute donated scholarship funds to eligible families for a variety of private or public educational expenses, including private school tuition, tutoring services, textbooks, and more. To qualify for scholarships, students had to live in households earning no more than 300% of the area's median gross income (AGMI) and be eligible to enroll in K-12 schools. EdChoice published an interactive U.S. map on May 21, 2026, displaying what 300% of AGMI would be for FY 2026 across the country. The program will take effect January 1, 2027.
