ECCA scholarship eligibility: who qualifies and what's covered

TL;DR

• The Federal Scholarship Tax Credit (FSTC) — also known as the Educational Choice for Children Act (ECCA) and codified at IRC §25F — will fund scholarships for K–12 students whose household income falls under federal eligibility thresholds (linked to area median income).
• Families must live in a state that has opted in to ECCA. If your state hasn’t opted in, scholarships aren’t available.
• Scholarships can cover a broad range of qualifying educational expenses — not just private school tuition, but tutoring, special-education services, books, and more.
• Families apply through a Scholarship Granting Organization (SGO) designated by their state. SGOs administer eligibility verification and scholarship awards.
• The program begins January 1, 2027; SGOs will publish application timelines in the months leading up to launch.

Which students qualify

Eligibility under §25F hinges on three things:

1. Age / grade: The student is eligible to enroll in a public elementary or secondary school. Practically this means K–12; pre-K only counts in states where pre-K is treated as part of public school enrollment. The student does not need to be currently enrolled in public school — the test is eligibility to enroll.
2. Household income: at or below 300% of Area Median Gross Income (see below).
3. State of residence: The family lives in a state whose governor has opted in, and the SGO they apply through serves that state.

Income limits: 300% of AMGI

The federal income cap is 300% of Area Median Gross Income (AMGI), as that term is used in IRC §42 (the Low-Income Housing Tax Credit). This means the threshold uses HUD’s annually-published Area Median Income tables, broken down by county/MSA and adjusted for family size. Income is measured at the household level (not AGI of a single filer).

Because AMI varies dramatically across the country, the dollar threshold a family of four faces in a high-cost metro can be much higher than in a low-cost rural area. The intent is to keep ECCA accessible to working- and middle-class families across very different cost-of-living regions.

Priority order for awards

When an SGO has more eligible applicants than scholarship dollars, the statute (§25F(d)) requires it to give priority to:

1. Students who received a scholarship from the same SGO the prior school year.
2. Siblings of prior-year recipients.

Beyond those two priority tiers, SGOs have discretion. There is no statutory priority for low-income families over higher-income (but still eligible) families, though many SGOs add their own criteria favoring lower-income, special-needs, or specific underserved populations.

Which schools and programs are covered

ECCA was written to be flexible about how scholarship dollars are used. Eligible educational settings can include:

• Independent and religious private schools
• Public charter schools (where applicable)
• Microschools and learning pods
• Special-education and therapy providers
• Tutoring providers and supplemental academic programs
• Approved homeschool curricula and providers (subject to SGO and state policies)

SGOs may have additional rules about which providers they fund. Some focus on a particular sector (e.g., Catholic schools, special-needs services); others fund a broad mix.

Which educational expenses are covered

ECCA defines “qualified education expenses” by reference to IRC §530(b)(3)(A) — the same expense list used for Coverdell Education Savings Accounts. That list is broader than many people assume:

• Tuition and fees at public, private, or religious K–12 schools
• Books, supplies, and equipment required for instruction
• Academic tutoring
• Special needs services for special-needs beneficiaries (occupational, physical, behavioral, and speech-language therapies; assistive technology; specialized instruction)
• Room and board, uniforms, and transportation when required for school enrollment
• Supplementary items and services, including extended-day programs
• Computer technology, equipment, internet access, and related services — for the student and the student’s family during the school years (excluding general-use sport, game, or hobby software unless predominantly educational)
• Standardized test fees (SAT, ACT, AP, state assessments)

Each SGO publishes its own application of these federal guidelines. Some SGOs may add restrictions (for example, focusing only on tuition); others apply the full §530(b)(3) list.

Scholarships are not taxable income

Under IRC §139K (added alongside §25F), ECCA scholarship amounts are excluded from gross income. Neither the student nor the parent or guardian owes federal income tax on scholarship dollars received. This applies to amounts received after December 31, 2026.

How families apply

1. Confirm your state has opted in. Visit the state-by-state status map. If it hasn’t, scholarships aren’t available to your family yet.
2. Find a Scholarship Granting Organization (SGO) serving your state. The Treasury maintains a list of designated SGOs based on each governor’s annual submission. Many SGOs serve a particular geography, school type, or student population.
3. Complete the SGO’s application. You’ll submit basic family information, income documentation (typically a recent tax return), and any additional materials the SGO requires.
4. Wait for an award decision. Award timing depends on the SGO’s funding cycle. Some SGOs award on a rolling basis; others have fixed application windows.
5. Use the scholarship. Funds are typically paid directly to the school or service provider, not to the family, to ensure they’re used for qualifying educational expenses.

Special circumstances

Students with disabilities

Many SGOs prioritize or have dedicated funding streams for students with disabilities, recognizing that families often face additional education costs (specialized schools, therapies, assistive technology) that public schools may not fully address.

Military families

Frequent moves and unique educational needs of military-connected students are an explicit consideration in some SGOs’ award criteria. ECCA scholarships can travel with the student to a new state if both states have participating SGOs and the family meets eligibility there.

Foster and kinship families

SGOs typically count the household’s actual financial situation rather than the foster placement’s legal structure. Caseworkers and family courts can help families navigate documentation.

How participation varies by state

While ECCA is a federal program with federal eligibility floors, states have meaningful discretion in two areas:

• Whether to opt in at all. Without the governor’s annual SGO submission, no scholarships are available in the state.
• How to oversee participating SGOs. Some states are adding additional oversight (nondiscrimination requirements, academic reporting, etc.). These state-layer rules can affect which SGOs operate in a state and what they cover.

For the latest on your state’s status, see the state participation page.

Frequently asked questions