Does my state have to opt in, and what should my family do in 2026 to be ready for 2027?

Question

Accepted Answer

Yes. The federal scholarship tax credit is voluntary for states, and it does not switch on automatically where you live. Under section 25F of the Internal Revenue Code, a state is a covered state for a year only if it elects to participate for that year and identifies the scholarship granting organizations, or SGOs, in the state. Students can receive scholarships funded through the programme only in a participating state, and a donor can claim the credit only for a cash gift to an SGO that appears on a covered state's list for that year. Elections are made one year at a time, so a state's position for 2027 does not by itself settle its position for later years.

For 2027, the calendar sits in temporary regulations that are in force now (T.D. 10057), building on Revenue Procedure 2026-6. A state makes its advance election on IRS Form 15714 on or before January 1, 2027, and it completes that election by sending its SGO list to the IRS on or before February 15, 2027. A state that files the election but never sends the list is out for the year, because no organization in that state can then qualify as an SGO. The roster of states that have elected is still moving, since states can file up to the January 1 deadline, so do not rely on a count or a list copied from an older page. The IRS keeps the current list on its Federal Scholarship Tax Credit page, and that page is the place to check your own state's status.

What a family can usefully do in 2026 is preparation, not giving for the credit, because the credit applies only to contributions made from January 1, 2027. Watch your state's decision and, after February 15, 2027, note which SGOs appear on its official list. If you hope your child might receive a scholarship, ask the SGOs on that list how and when they will take applications, and keep the household income records an SGO will need to verify eligibility. If you plan to give, wait until an SGO is listed for 2027, give in cash, designate the gift for section 25F when you make it, and keep the SGO's written acknowledgment. Those last steps matter because an unlisted organization, however worthy, cannot generate this credit.