What is the federal scholarship tax credit, and when does it start?

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The federal scholarship tax credit is a new federal programme that turns charitable giving into K-12 scholarships. From January 1, 2027, an individual can give cash to a qualified scholarship granting organization (an SGO) and claim a dollar-for-dollar credit against their federal income tax of up to $1,700. The SGO then awards scholarships to eligible elementary and secondary students, which families can put toward tuition and other schooling costs at participating schools, including Christian schools.

The credit itself is law, not a proposal. Congress created it as section 25F of the Internal Revenue Code in the legislation signed on July 4, 2025 (Public Law 119-21, section 70411), and it applies to contributions made from January 1, 2027. Two honest qualifications belong with that. First, the credit is nonrefundable: it can reduce your federal tax bill to zero, but it will not produce a refund beyond that, and any unused credit can be carried forward for up to five years. Second, the detailed operating rules are still being written. The Treasury Department and the IRS published temporary regulations (T.D. 10057) that are in force now for state elections and SGO certification, and proposed regulations (REG-117199-25) on October 2, 2026 covering the credit itself. The proposed rules are not final. Written comments are open until December 1, 2026, and a public hearing on the proposed regulations is scheduled for December 15, 2026. Treasury has said taxpayers may rely on them for 2027 contributions. Where this page describes a detail that rests only on the proposed rules, it says so.