A new federal tax credit program is giving taxpayers in 27 states an opportunity to support education while reducing their federal tax bill.
The Federal Scholarship Tax Credit (FSTC) program allows eligible taxpayers to receive a federal tax credit for contributions made to approved Scholarship Granting Organizations (SGOs). These organizations provide scholarships that help students cover qualified elementary and secondary education expenses.
How the Program Works
Taxpayers can claim a federal tax credit of up to $1,700 by making a qualified contribution to an approved SGO in a participating state.
To qualify:
- The contribution must be made to an approved SGO.
- The SGO must be located in a state participating in the FSTC program.
- The state must submit its list of qualified SGOs to the federal government.
Participation in the program is voluntary, meaning each state chooses whether to opt in.
Growing State Participation
According to the announcement, 27 states have already elected to participate in the program, reflecting growing support for educational scholarship initiatives.
Officials say the program is designed to expand educational opportunities by helping scholarship organizations fund students’ educational needs. IRS leadership has welcomed the strong initial participation, noting that the program supports elementary and secondary education by expanding scholarship opportunities for students.
Participating States
As of early 2026, the following states have formally opted into the FSTC program:
- Alabama
- Alaska
- Arkansas
- Colorado
- Florida
- Georgia
- Idaho
- Indiana
- Iowa
- Louisiana
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- North Dakota
- Ohio
- Oklahoma
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Virginia
- West Virginia
- Wyoming
Looking Ahead
The IRS will continue updating the official list of participating states as more states complete the enrollment process. Taxpayers interested in claiming the credit should verify that their state and chosen SGO are approved before making a contribution.
For families, donors, and education advocates, the FSTC program represents a new way to support student scholarships while receiving a valuable federal tax benefit.