What pending states stand to forgo: a closer look at Pennsylvania
Fourteen states have yet to decide on the federal Scholarship Tax Credit (FSTC / ECCA / §25F). Pennsylvania is one of the most-watched: an advocacy-built impact projector pegs the state's three-year foregone scholarship volume at ~$1.97B if Gov. Josh Shapiro doesn't opt in before the program's January 1, 2027 launch.
With New York's May 8, 2026 announcement, the count of states moving toward participation in the federal Scholarship Tax Credit (FSTC / ECCA / §25F) continues to grow. But 14 states — including several of the country's most populous — remain undecided, and the program's January 1, 2027 launch is approaching. Pennsylvania, where Governor Josh Shapiro has not announced a decision, has emerged as one of the most-watched holdouts.
What does “not opting in” cost residents of a pending state? In practical terms: donors anywhere in the country can still claim the §25F federal credit (up to $1,700 per filer, $3,400 per joint return) by giving to Scholarship Granting Organizations (SGOs) in opted-in states — but the scholarships those donations fund will go to K-12 students in the opted-in states, not back home. The credit follows the SGO's state of operation, not the donor's residence. States must designate their qualifying SGOs through the governor's annual submission to the U.S. Treasury.
The America First Policy Institute (AFPI) — an advocacy organization — publishes an “EFTC Donation Impact Projector” that estimates state-level foregone donations under different participation assumptions. For Pennsylvania, the projector estimates approximately $1.97 billion in foregone scholarship funding over the 2027–2029 window if the state does not opt in, translating to roughly 354,000 scholarships at a $5,000 average. The projector uses 2022 IRS Statistics of Income filer counts and assumes a 10% individual / 6% joint baseline participation rate rising 2 points annually — rates the tool notes are “set well below” the 41.4% participation observed for the CARES Act charitable deduction. Numbers from advocacy projectors should be read as illustrative scenarios with stated assumptions, not as official forecasts; actual takeup will depend on donor behavior, final IRS rulemaking under Notice 2025-70, and the SGO ecosystem that develops in each state.
The opt-in decision is annual: a governor who declines in 2027 can still submit a qualifying SGO list in 2028 or any subsequent year. For Pennsylvania and other pending states — including New Jersey, Illinois, Michigan, Massachusetts, Maryland, California, Washington, and others — that means the cost of waiting is bounded by the program year, but compounds annually as long as the state stays out. Eligible students under §25F are those in households at or below 300% of the relevant Area Median Gross Income, and scholarship funds can support tuition as well as a range of other educational expenses including tutoring, educational therapies, testing fees, and educational software.