The federal scholarship tax credit starts January 1, 2027 — and 30 states are in

What Congress actually built

Section 70411 of the One Big Beautiful Bill Act (Pub. L. 119-21, July 4, 2025) added § 25F to the tax code: a nonrefundable federal income tax credit of up to $1,700 per taxpayer per year for cash gifts to a Scholarship Granting Organization, starting with tax year 2027. The credit is reduced dollar-for-dollar by any state credit claimed for the same gift, and unused credit carries forward up to five years.

Two things make this different from the state tax-credit scholarship programs many private schools already know. First, there is no aggregate cap — no statewide pot that runs out in January, no race to reserve credits. Every eligible donor can claim up to $1,700, every year. Second, it is federal: a donor in any state can give to any listed SGO in any covered state. What a state's decision controls is whether its own students can receive scholarships and whether its own SGOs can be listed.

The money never touches the school directly

A school cannot take § 25F donations. The credit attaches only to gifts to a Scholarship Granting Organization: a 501(c)(3) public charity (not a private foundation) that serves at least ten students across more than one school, spends at least 90% of its income on scholarships, and does not earmark gifts for particular students. The SGO awards scholarships to students whose household income is at or below 300% of area median gross income, for tuition and other designated school expenses — and the family or the SGO pays the school.

A donation only earns the credit if the SGO appears on the list its state certifies to the U.S. Treasury, and a listed SGO funds scholarships only within its own state. So for a school, the entire program reduces to one question: which SGOs will be on my state's certified list — and do they know my school exists?

How a state gets in — and when

Participation is a voluntary annual election by each state. Under IRS Notice 2025-70, the election is made by the governor or whatever official state law designates; several states passed statutes to settle who decides. For 2027, Rev. Proc. 2026-6 set the exclusive procedure: file IRS Form 15714 on or after January 1, 2026, then perfect the election by submitting the state's certified SGO list to Treasury. The list is due by January 1 of each covered year; for the first year the statute says only 'as early as practicable,' and the final date will be set by Treasury guidance. Treasury previewed its regulatory framework on June 10, 2026 and expects proposed regulations by the end of September 2026.

The election is annual. A state that sat out 2027 can join for 2028 — and a state on this year's roster has to re-elect and re-list every year.

Where every state stands

Thirty states have elected for 2027. Most of the other twenty have not actually said no — they are undecided or waiting on federal rules, marked pending below — while six have refused outright. Each row cites the primary source it was read from: an IRS roster listing, a governor's executive order, a statute, or the veto that blocked one.

30 of 50 states elected for the 2027 first credit year, as verified August 11, 2026. Of the rest, 14 are still deciding — marked pending — and 6 have refused, by veto or by the governor's stated position. The election is annual, so this table will change.

What a school in an electing state should do this fall

Nothing about § 25F needs money moved in 2026. The useful work is administrative, and all of it is cheap:

• Put the SGO list on the office calendar. Your state must certify its SGO list to Treasury around January 1, 2027. The day it publishes, you want to know which organizations on it serve your county — that list is the program, as far as your school is concerned.
• Talk to the scholarship organizations that already exist. States with their own tax-credit scholarship programs already have STOs and SGOs running, and those are the likeliest names on a certified list — Alabama, for one, pointed the revenue department that runs its existing SGO framework at the federal program too. If your families have never used one, an introduction now beats a cold call in February.
• Hold your donor announcement until the list exists. A gift to an organization that is not on the certified list earns no federal credit. Telling your parent community 'give in January, to one of these' is a service; telling them 'give now' is a mistake made on your letterhead.
• Expect income verification. SGOs must verify household income at or below 300% of area median gross income. Expect them to ask families for documentation at award time, and expect families to ask your office what to send.
• Check your state program's stacking rules before a family holds both. Federal law does not stop a student from holding an ESA and an SGO scholarship — but several state programs do, and in some states the school repays the money when the rule is broken. Your state's own program terms decide this; check them, not the federal statute.

What this changes on Monday

For most school offices, nothing yet — and that is the point of reading about it in August. The schools that benefit first will be the ones whose names the SGOs already know, whose office can answer a family's income-documentation question, and whose January calendar already says 'state SGO list publishes — check it.' All three are an afternoon of work, and none of them can be done in a rush next February.