Frequently Asked Questions

What if $1700 cost you $0? What you need to know about the Federal Scholarship Tax Credit

Beginning in January 2027, new federal legislation will allow taxpayers to redirect up to $1700 of their federal tax liability to support Jewish education—instead of paying those funds to the government.

These organizations distribute scholarship funds that help families afford eligible educational expenses, including private school tuition.

The Education Covenant Project works with schools and communities to prepare for this opportunity. This page provides an overview of how the program works and what it means for taxpayers and families.

The new credit allows taxpayers (parents or non-parents) to donate up to $1,700 per year to an approved Scholarship Granting Organization and receive a 100% federal tax credit for that donation, which reduces the amount of federal tax owed.

This differs from a charitable deduction, which only reduces taxable income. The credit reduces taxes dollar for dollar.

The federal scholarship tax credit becomes active in January 2027.
Only donations made after January 1,  2027 qualify for the credit.
Schools and communities are preparing now so that they can maximize scholarship funding for parents as early as the2027–2028 academic year begins.

Beginning January 1, 2027:

  • A taxpayer makes a qualifying cash donation to an approved Scholarship Granting Organization.
  • The taxpayer receives a reduction in taxes equal to the donation amount, up to $1,700.
  • Parents apply for scholarships through approved Scholarship Granting Organizations, which verify eligibility and determine awards.
  • The Scholarship Granting Organization distributes scholarship funds to schools to apply toward tuition of eligible students.
  • Schools apply scholarship dollars toward tuition and other qualified educational expenses.

A Scholarship Granting Organization (SGO) is an approved nonprofit that receives donations under the federal tax credit program and distributes those funds as scholarships to eligible students.
Taxpayers contribute to an SGO (not directly to a school), and families apply through the SGO, which verifies eligibility and determines scholarship awards. In many cases, donors may indicate a preferred school, and funds are allocated accordingly within program rules.
The total amount of scholarship funding depends on participation—the more donors who contribute, the more funds are available to support students.

Any individual taxpayer with federal tax liability may participate.
The credit is limited to $1,700 per individual per year.
Taxpayers may donate more, but the credit applies only up to that amount.
The federal tax credit cannot also be claimed as a charitable deduction.

No. Any taxpayer can participate in the program and receive the tax credit, regardless of whether they have a child in school.

Yes. You can contribute any amount. You’ll receive a tax credit for what you give, up to $1,700 per year. If you give more than $1,700, the credit applies only to the first $1,700.

Eligible students must:

  • Be enrolled in kindergarten through 12th grade
  • Come from a household with income at or below 300% of the Area Median Income

Families will apply directly through approved Scholarship Granting Organizations. Each SGO will announce its own application timeline and process, including when applications open. SGOs are responsible for verifying eligibility and awarding scholarships based on available funds and SGO program guidelines. Schools and communities will share updates with families as more information becomes available.

Why Communities Are Collecting Pledges Now

Although donations cannot be made until January 2027, schools are collecting advance pledges to help forecast scholarship funding and begin reducing parent tuition responsibility for the 2027-2028 academic year.

A pledge is not a donation and is not legally binding.It simply indicates that a taxpayer intends to participate once the credit becomes active.

Set up pledging for your school

Preparing for 2027

ECP works with schools and their communities now—before the credit goes live—to build awareness and maximize taxpayer participation. The goal is to ensure communities are ready to fully leverage the opportunity and help reduce tuition pressure for families.

Through this effort, schools collect advance pledges from community members who intend to participate. These pledges provide early visibility into expected scholarship funding, allowing schools to plan ahead for the 2027–2028 academic year.

Once the credit becomes active, ECP supports schools in converting those pledges into qualifying donations to approved Scholarship Granting Organizations, with funds distributed to eligible students.

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