Understanding the Federal Scholarship Tax Credit
Resources for schools, scholarship organizations, and education partners navigating the Federal Scholarship Tax Credit.
What Is the Federal Scholarship Tax Credit?
The Federal Scholarship Tax Credit Program is a federal income tax credit that supports K–12 education scholarships through private donations and state-approved Scholarship Granting Organizations.
Donations and Tax Credit
Individuals receive a dollar-for-dollar federal income tax credit for donations made to approved SGOs. These contributions are privately funded and are not part of a federal education program.
Scholarships for Students
Scholarship Granting Organizations use donated funds to award scholarships that help eligible students pay for qualified K–12 education expenses.
Program Administration
The FSTC operates through the federal tax code. States choose whether to participate, and SGOs are responsible for administering scholarships and meeting compliance requirements.
Who the FSTC Supports
The Federal Scholarship Tax Credit is designed to support eligible K–12 students and their families by helping make educational options more accessible.
Depending on state participation and program structure, FSTC-funded scholarships may support students across a range of learning environments, including:
- Private and faith-based schools
- Charter schools
- Independent schools
- Public schools
- Homeschool and hybrid education models
Scholarships may be used for qualified K–12 education expenses as defined in federal law and administered by approved SGOs.
FSTC Resources
How FACTS Supports the FSTC
FACTS supports Scholarship Granting Organizations and schools by providing technology and expertise that help manage the operational complexity of school choice programs.
- Application intake and eligibility verification
- Scholarship administration and reporting
- Coordination across state and federal funding programs
- Support for families, schools, and SGOs
For schools already using FACTS Financial Aid, FSTC-related scholarships can be managed within the same application workflow families already know, reducing duplicate applications and administrative effort.
FACTS brings established experience supporting scholarship programs at scale.
Schools Supported
SGOs Served
Years Supporting Education and Scholarship Programs
FSTC Participation FAQs
Yes. The FSTC is designed to operate alongside existing programs, though funds, reporting, and compliance requirements must be managed separately.
No. The FSTC operates through the federal tax code and does not create federal control over school admissions, curriculum, or instructional practices.
No. Schools do not apply to or administer the Federal Scholarship Tax Credit. Schools participate by coordinating with Scholarship Granting Organizations as students use scholarship funds.
Scholarship Granting Organizations administer the program, including eligibility verification, scholarship awards, reporting, and compliance.
No. Scholarship Granting Organizations must meet federal requirements and be certified by a participating state. Some existing SGOs may already align closely, while others may need to adjust policies or processes.
Yes. States must choose to opt in and certify participating Scholarship Granting Organizations. Scholarships are only available in states that elect to participate.
FSTC Insights
Explore insights, guidance, and real-world examples to help SGOs, organizations, and schools understand FSTC and prepare for what’s ahead.
Have questions about FSTC?
Unsure how FSTC applies to your organization, what to prioritize, or how to get ready? Our team is here to provide perspective, answer questions, and help you plan next steps.
