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.
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 to residents of all 50 states and DC. It's a federal program and doesn't require any state action.
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.
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Educational Choice for Children Act
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