The Educational Choice for Children Act
Tuition Scholarships. Every State.
Countdown to ECCA Credit
The Educational Choice for Children Act will be effective as law for states that opt in, on January 1st, 2027.
Overview of the Educational Choice for Children Act (ECCA)
On July 4 2025, the Educational Choice for Children Act (ECCA) was enacted as part of federal budget reconciliation, creating the nation's first federal scholarship‑tax‑credit program. It is a permanent, uncapped provision in the tax code that encourages private donations to fund K‑12 scholarships.
- The program offers a non‑refundable federal income‑tax credit equal to the amount donated, up to $1,700 per tax return.
- Unused credits may be carried forward for up to five years.
- There is no overall federal cap on credits issued.
- States must opt in by authorizing Scholarship Granting Organizations (SGOs) to participate.
Why States Are Opting In
"I would be crazy not to opt in. If Colorado doesn't participate, our federal tax dollars will simply flow to other states."Governor Jared Polis (D), Colorado
The federal ECCA tax credit is available to all taxpayers nationwide, regardless of whether their state opts in. However, scholarships can only be distributed to students in states that have opted in by designating eligible scholarship organizations.
This creates a critical dynamic: if your state doesn't opt in, residents can still donate to organizations in other states and claim the federal tax credit but the scholarship dollars flow elsewhere. Governors are recognizing this as a fiscal imperative to capture federal resources for their own communities at zero cost to state budgets.
- Zero State Cost: ECCA is funded entirely through federal tax credits. Participating states incur no budget impact, no new spending, and no fiscal burden.
- Capture Federal Resources: With up to $1,700 per taxpayer in federal credits available, states that opt in can potentially capture millions of dollars in federal education funding that stays in their communities and stimulates their local economy. If your state doesn't opt in, these dollars flow to neighboring states instead.
- Support Working Families: ECCA scholarships help working families access educational options that meet their children's needs, with income targeting up to 300% of area median income.
- Minimal Administrative Burden: The IRS and U.S. Department of the Treasury handle oversight and compliance. States simply designate eligible scholarship organizations.
The Cost of Not Opting In: A Real-World Example (North Carolina)
Here's what happens when a state like North Carolina who chose not to participate in ECCA:
Your State Votes No
Your state decides not to opt into ECCA. No scholarship granting organizations are designated. Families in the state cannot receive ECCA scholarships.
Residents Donate Out-of-State
100,000 residents want the federal tax credit. Since their state didn't opt in, they donate $1,700 each to scholarship organizations in neighboring states as they would rather give the same money to a school than the federal government.
Total donations leaving your state: $170,000,000+
Other States Receive the Money
Scholarship organizations in neighboring states receive $170,000,000 in donations from your state's residents. These funds support students in those states not yours.
Your state's families helped: 0
Your State Loses Out
Your state just lost $170,000,000 ($170 million) in federal education funding that could have stimulated its local economy, supported its working families, and stayed in its communities. That money is now circulating in other states' economies instead.
And remember: This is from just 100,000 donors. With millions of taxpayers in most states, the actual amount at stake could easily exceed $1 billion annually.
The Solution Is Simple
States that opt in keep these federal dollars in their own communities at zero cost to their state budgets. It's not a political issue; it's a fiscal reality. As Governor Jared Polis (D) said: "I would be crazy not to opt in."
Only 1 state has voted no so far. Don't let yours be the next!
Reach out to your governor today!
Student Eligibility & Uses
Scholarships funded through ECCA are designed to expand educational opportunity. Eligible recipients must:
- Live in households with incomes at or below 300% of their area's median gross income.
- Be eligible to enroll in a public K-12 school.
Scholarships can be used for a wide range of education expenses, including:
- Tuition and fees at private schools, charter schools, microschools, or for homeschooling
- Books, supplies, online educational materials and technology
- Tutoring, dual‑enrollment courses and educational therapies (e.g., occupational, physical, behavioral or speech‑language therapy)
Educational Equity & Opportunity
The ECCA scholarship program is designed to expand educational access for students who have historically faced barriers to opportunity, particularly working families and students with special needs.
Expanding Access for Underserved Communities
Research shows that families in underserved communities often face limited educational options. Recent data reveals that 6 out of 10 students aren't reading at grade level, and 7 out of 10 can't perform math proficiently highlighting the urgent need for alternative approaches.
- Income-targeted support: ECCA scholarships serve families earning up to 300% of area median income, ensuring working families can access educational options.
- Priority for siblings: Once one child qualifies, siblings can benefit, providing stability for entire families.
- Flexible uses: Scholarships cover tuition, tutoring, dual enrollment, educational materials, and more.
Supporting Students with Disabilities
Many students with special needs require specialized educational services that may not be readily available in their assigned schools. ECCA scholarships provide access to critical interventions:
- Therapeutic services: Occupational therapy, physical therapy, behavioral therapy, and speech-language services.
- Assistive technology: Specialized equipment and software to support learning.
- Specialized instruction: Access to schools and programs designed for specific learning needs.
Innovation in Education
ECCA scholarships enable families to explore innovative educational models that may better serve their children's individual needs:
- Charter schools: Public schools with innovative approaches and specialized focus areas, operating independently but accountable for results.
- Microschools: Small, personalized learning environments with lower student-to-teacher ratios and individualized instruction.
- Private schools: Independent schools offering diverse educational philosophies and specialized programs.
- Homeschooling support: Resources, materials, and services for families who educate their children at home.
A Broad Coalition for Educational Choice
Educational choice has deep roots in progressive movements, particularly within Black communities who historically built their own schools and advocated for alternatives when the system failed their children.
Research from the Center on Reinventing Public Education (CRPE) notes that progressives have long supported choice in healthcare, housing, and higher education recognizing that families are best positioned to make decisions for their children.
Polling shows broad support across communities: 62% of Americans overall, 60% of Black Americans, and 62% of Hispanic Americans support educational choice programs like charter schools and scholarships.
Donor Benefits & Rules
If you pay federal income tax, you can support K‑12 scholarships and reduce your tax liability at the same time.
- Individuals may donate to any qualified SGO nationwide and claim a dollar‑for‑dollar tax credit up to $1,700 per year.
- Unused credit can be carried forward for up to five years.
- Donations must be made in cash and cannot be earmarked for a specific student.
- Businesses are not eligible for the federal credit (it applies only to individual taxpayers).
- If your state offers its own credit, you may receive both state and federal credits by making separate contributions to each program.
Scholarship Granting Organization Requirements
- Must be a 501(c)(3) public charity and cannot be a private foundation.
- Use at least 90% of donations for scholarships.
- Award scholarships to at least 10 students and serve more than one school.
- Verify family income and ensure recipients meet eligibility requirements.
- File annual reports; oversight is handled by the IRS and Department of the Treasury.
State Participation & How You Can Help
The Opportunity Cost of Not Opting In
If your state doesn't opt in, your residents' federal tax dollars will still fund ECCA scholarships they'll just flow to students in neighboring states instead of staying in your community. States that opt in capture these federal resources at zero cost to their budgets.
For families to access ECCA scholarships, each state must opt in by designating eligible SGOs. If your state does not opt in, scholarships cannot be distributed there even though taxpayers may still claim the credit. You can make a difference:
- Check whether your state has opted into ECCA (list of participating states will be updated here as governors file certifications).
- Contact your governor and urge them to authorize SGOs so that students in your state can benefit.
Frequently Asked Questions
Yes. You may qualify for both credits if you make separate donations to each program; however, you cannot claim both credits for the same contribution.
No. Only individual taxpayers can claim the federal credit.
No. Donations cannot be earmarked for a specific student. SGOs independently determine scholarship recipients based on eligibility and available funds.
No. The program is uncapped; there is no aggregate limit on the total credits available.
Families in non‑participating states cannot receive scholarships, though taxpayers can still claim the credit. Encourage your governor to opt in using our letter‑writing tool.
ECCA scholarships are income-targeted to serve working families (up to 300% of area median income), prioritize access to special education services, and expand educational options in underserved communities. The program helps families access charter schools, specialized instruction, and therapeutic services that may not be readily available in their assigned schools.
No. ECCA is funded entirely through federal tax credits with zero impact on state budgets. There is no new state spending, no fiscal burden on state governments, and administrative oversight is handled by the IRS and U.S. Department of the Treasury.
ECCA scholarships support a diverse range of educational options including private schools, public charter schools, microschools, and homeschooling programs. The emphasis is on innovation and meeting individual student needs rather than one-size-fits-all approaches.
ECCA scholarships can be used for specialized services often critical for students with disabilities, including occupational therapy, physical therapy, behavioral therapy, speech-language services, assistive technology, and access to schools with specialized instruction designed for specific learning needs.
As Colorado Governor Jared Polis (D) stated, 'I would be crazy not to opt in.' If a state doesn't participate, federal tax dollars from their residents will flow to other states instead. Opting in captures these federal resources at zero state cost, serves working families, and demonstrates bipartisan commitment to educational opportunity.
No. The ECCA program has strong safeguards built in. The credit is capped at $1,700 per taxpayer, which doesn't create significant incentive for fraud. Donations must be made in cash and cannot be earmarked for specific students. The IRS and U.S. Department of the Treasury provide federal oversight, and scholarship granting organizations must be 501(c)(3) public charities that use at least 90% of donations for scholarships. They must file annual reports and serve at least 10 students across multiple schools.
You can receive a dollar-for-dollar federal tax credit of up to $1,700 per year by donating to a qualified scholarship granting organization. This means if you donate $1,700, you reduce your federal tax liability by $1,700. Unused credits can be carried forward for up to five years. If your state also offers a scholarship tax credit, you may qualify for both by making separate donations.
This is currently being clarified by the U.S. Department of the Treasury. The law states 'any taxpayer' may receive up to $1,700, but it's not yet clear whether married couples filing jointly can each claim $1,700 (for $3,400 total) or are limited to $1,700 per household. Treasury guidance will provide the final answer on this important question.
No. ECCA is funded through federal tax credits, not through state or local education budgets. Public school funding remains unchanged. Additionally, ECCA scholarships can be used to support students in public schools through tutoring, dual enrollment courses, educational therapies, and specialized services. The program expands options without reducing public school resources.
ECCA is a federal tax credit against your federal income taxes, while state scholarship tax credits reduce your state tax liability. ECCA offers up to $1,700 per taxpayer with no aggregate cap nationwide. State programs vary by state with different credit amounts, caps, and eligibility rules. You can potentially benefit from both programs by making separate donations one to a federal ECCA-qualified SGO and one to a state-qualified organization.
The ECCA tax credit becomes available starting with the 2027 tax year (taxes filed in 2028). Donations made in 2027 or later to qualified scholarship granting organizations in participating states will be eligible for the credit. States are currently opting in and designating qualified SGOs in preparation for the 2027 launch.
Scholarship granting organizations (SGOs) are responsible for verifying eligibility. They must confirm that recipients live in households at or below 300% of area median income and are eligible to enroll in public K-12 schools. SGOs file annual reports with oversight from the IRS and Department of the Treasury. This verification process ensures scholarships reach the intended beneficiaries working families seeking educational options.
Yes. ECCA scholarships can cover a wide range of homeschooling-related expenses including curriculum materials, educational software, online courses, tutoring services, educational therapies, books, supplies, and technology. This makes the program valuable for families who choose to educate their children at home.
At least 90% of all donations to qualified scholarship granting organizations must be used for scholarships. This is a federal requirement. SGOs can use up to 10% for reasonable administrative costs. This high percentage ensures that the vast majority of every donation directly benefits students and families.
To become a qualified SGO, your organization must: (1) be a 501(c)(3) public charity (not a private foundation), (2) operate in a state that has opted into ECCA, (3) be designated by that state as an eligible SGO, (4) commit to using at least 90% of donations for scholarships, (5) serve at least 10 students across multiple schools, and (6) verify recipient eligibility and file annual reports. Contact your state education agency for specific designation procedures.
Yes. Many existing scholarship granting organizations that currently operate state-level scholarship tax credit programs can also participate in ECCA, provided they meet the federal requirements and receive state designation. Organizations can administer both state and federal scholarship programs simultaneously, expanding their ability to serve families.
Qualified SGOs must file annual reports demonstrating compliance with ECCA requirements. These reports verify that at least 90% of donations were used for scholarships, that recipients met income eligibility requirements (300% of area median income or below), that scholarships were awarded to at least 10 students across multiple schools, and that no donations were earmarked for specific students. The IRS and Department of the Treasury oversee this reporting.
Yes, within the federal framework. SGOs can establish additional selection criteria beyond the federal income requirement, such as prioritizing students from specific geographic areas, students with special needs, first-generation students, or students from underserved communities. However, scholarships must serve at least 10 students across multiple schools, and all recipients must meet the federal income eligibility threshold.
The timeline varies by state. Once a state opts in and establishes its SGO designation process, qualified organizations can typically apply and receive approval within weeks to a few months, depending on the state's procedures. Organizations should prepare by ensuring their 501(c)(3) status is current, developing scholarship selection and verification processes, and establishing reporting systems to meet federal requirements.
How ECCA Works
The funds are generated by donors who receive a dollar-for-dollar federal tax credit for contributions to nonprofit scholarship organizations.
How is ECCA funded?
Donors contribute to Scholarship Granting Organizations (SGOs) and receive a dollar-for-dollar federal tax credit.
- —Maximum tax credit per return wether single or joint is $1,700
- —Tax credits can be carried forward for 5 tax years
- —Donors can contribute to any qualified SGO in any state
Step 1
Bob owes $5,000 in federal taxes
Who is eligible?
Students in families earning 300% or below of the median income in their area. Priority given to previous scholarship students and siblings.
Scholarship uses
Tuition, curriculum, books, online educational materials, tutoring, educational therapies for students with disabilities including OT, PT, behavior and speech-language.
State availability
ECCA will be available in states where the governor formally opts into the program.
Urge your state to opt into the
Educational Choice for Children Act
Stay updated on the latest developments and help support this important legislation.
Research & Data
Evidence-based analysis of federal scholarship programs, educational outcomes, and fiscal impacts from nonpartisan research organizations and think tanks.
Key Findings
- Zero state budget impact: Federal tax-credit scholarship programs operate at no cost to participating state budgets.
- Broad community support: 62% of Americans support educational choice programs, including 60% of Black Americans and 62% of Hispanic Americans.
- Achievement gap urgency: Current data shows significant percentages of students not meeting proficiency standards, highlighting need for expanded options.
- Special education access: Scholarship programs expand access to specialized services for students with disabilities, including therapeutic interventions.
- Progressive heritage: Educational choice has deep roots in progressive movements, particularly within Black communities who historically built their own schools and advocated for alternatives.
- Economic stimulus: With up to $1,700 per taxpayer available, states can potentially capture millions in federal education funding that stimulates their local economy.
Final Text of the Bill
Overview of Section 25F - Qualified Elementary and Secondary Education Scholarships
This section allows a federal income tax credit for individuals making qualified contributions to scholarship granting organizations (SGOs) that provide scholarships for elementary and secondary education.
Key Provisions and Definitions
✅ Eligibility for Credit (§25F(a))
Any U.S. citizen or resident can claim a credit against federal income tax equal to the amount of their qualified contributions made in the tax year.
Credit Limitations (§25F(b))
Annual Cap:
- The maximum credit per taxpayer per year is $1,700.
Offset for State Credits:
- If a taxpayer also receives a state tax credit for the same contribution, the federal credit is reduced by that amount.
Definitions (§25F(c))
- Covered State:
A U.S. state or D.C. that voluntarily opts in to this federal program and provides a list of qualified SGOs.
- Eligible Student:
Must:
- Be in a household earning ≤ 300% of Area Median Gross Income (AMGI as defined in §42), and
- Be eligible to enroll in a public K-12 school.
- Qualified Contribution:
A cash charitable donation to an SGO used only to fund scholarships for eligible students within the state.
- Qualified Education Expenses:
Expenses under §530(b)(3)(A) (e.g., tuition, books, supplies).
- Scholarship Granting Organization (SGO):
Must:
- Be a 501(c)(3) organization (not a private foundation),
- Maintain separate accounts for these contributions,
- Meet specific operational requirements (see §25F(d)),
- Be on the state’s list of approved SGOs.
SGO Requirements (§25F(d))
Minimum Standards:
- Award scholarships to ≥10 students not all at the same school.
- Use ≥90% of funds for scholarships.
- Only fund qualified K-12 education expenses.
- Prioritize:
- Students who got a scholarship the prior year.
- Students with siblings who are scholarship recipients.
- Cannot earmark funds for specific individuals.
- Must verify income eligibility of recipients.
Self-Dealing Rules:
- May not give scholarships to disqualified persons (as per §4946).
No Double Tax Benefit (§25F(e))
You cannot deduct qualified contributions as a charitable donation if you're already claiming the 25F credit.
Credit Carryforward (§25F(f))
Carry Forward Rule:
- If the credit exceeds your tax liability, the unused portion may be carried forward for up to 5 years.
FIFO Rule:
- Credits are applied on a first-in, first-out basis.
State Responsibilities (§25F(g))
Each participating state must:
- Submit a list of eligible SGOs to the IRS annually.
- Be certified by a designated state authority (e.g., Governor).
Regulatory Authority (§25F(h))
The Treasury Secretary is authorized to issue:
- Regulations for enforcement,
- Rules on recordkeeping and reporting.
Conforming Amendments
- Section 25 is updated to include reference to §25F.
- The table of contents for the Tax Code is amended to add Section 25F.
Related Provision: §139K - Exclusion from Gross Income
1. Scholarship Exclusion (§139K)
Scholarships received for qualified K-12 expenses from an SGO are not taxable income for:
- The student, or
- The parent/guardian.
2. Effective Date:
- Applies to amounts received after Dec. 31, 2026.
Effective Dates (§70411(c))
- Tax Credit (§25F): Applies to taxable years ending after Dec. 31, 2026.
- Exclusion from Income (§139K): Also effective for amounts received after Dec. 31, 2026.