For the first time, Congress has created a federal scholarship tax credit that allows individuals to claim a dollar-for-dollar credit for donations specifically for K-12 scholarships. This new program is designed to expand K–12 education funding options for families, starting in 2027.
States are required to opt in to the program, and on January 22, 2026, Governor Mike Braun announced that Indiana will participate.
HOW THIS PROGRAM WORKS
Beginning January 1, 2027, taxpayers can donate up to $1,700 to an eligible scholarship granting organization (SGO) and receive the full amount back against what they owe in federal taxes.
Eligible families earning below 300% of the area median income qualify for scholarships, allowing them to choose quality education for their child. Scholarship funds can be used for qualified education expenses including tuition, fees, tutoring, educational therapies, transportation, technology, and more.
Eligible SGOs in Indiana:
- Institute for Quality Education, Inc.
- Legacy Foundation
- The Lutheran Scholarship Granting Organization of Indiana, Inc.
- Sagamore Institute Scholarship for Education Choice
- School Scholarship Granting Organization of Northeast Indiana, Inc.
(Last updated: July 2026)
HOW THE FEDERAL PROGRAM CONNECTS TO INDIANA
- Indiana has already opted in to participate [events.in.gov]
- Indiana already has a state-level SGO tax credit program (50% credit for donations) [edchoice.org]
- Both programs rely on private donations to SGOs to fund scholarships [in.gov]
What We Know
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What We’re WatchingThe IRS expects to release final regulations in late September 2026. This page will continue to be updated to share the most current and accurate information as this program’s framework develops. Sign up for updates as further guidance continues to be released. We’ll share the latest updates and regulation details when available. |
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Stay in the know about the Federal Tax Credit Scholarship Program!
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ELIGIBILITY AND LIMITS
(Last updated: July 2026)
Eligible Donors: Taxpayers who owe federal income tax
Eligible SGOs: 501(c)(3) nonprofit organizations that distribute 90% of the revenue for scholarships
Eligible Students: Income-based eligibility for families earning below 300% of the area median income
Eligible Gifts: Gifts to the Indiana SGO tax credit program cannot also be used for the federal credit. (Separate gifts are required to receive both credits.)