How does the $1,700 credit work, and can married couples claim $3,400?

Question

Accepted Answer

You choose a scholarship granting organization that appears on your state's official list, give it cash, keep its written acknowledgment, and claim the credit on your federal return for the year of the gift. The credit equals what you gave, up to the cap, and it reduces your tax dollar for dollar rather than reducing your taxable income the way a deduction does.

The statutory cap is $1,700 per taxpayer. Under Treasury's October 2026 proposed regulations, each spouse on a joint return is treated as a separate taxpayer, so a married couple where both spouses give can claim up to $3,400 combined. That $3,400 figure rests on the proposed regulations, which are not yet final, although Treasury says taxpayers may rely on them for 2027. Written comments on the proposed regulations are due December 1, 2026, and a public hearing is scheduled for December 15, 2026. Three further rules from the statute are worth knowing before you give. You cannot take a charitable deduction for the same gift you claim the credit on. If you also receive a state tax credit for the same contribution, the federal credit is reduced by that state benefit, and the proposed regulations add an ordering rule intended to preserve as much of the federal credit as the law allows. And because the credit is nonrefundable, a household with little or no federal tax liability will benefit less from it in the year of the gift, with up to five years of carryforward to use the rest.

This is general information, not tax advice. For gifts of any size, confirm your own position with a qualified tax professional before the end of the tax year.