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Federal Scholarship Tax Credit

The Program

The Federal Scholarship Tax Credit (FSTC) is a federal program that allows taxpayers to receive a dollar-for-dollar federal tax credit for contributions to nonprofits that provide education scholarships. These scholarships can support a range of educational expenses, including private school tuition, tutoring, special education services, transportation, and out-of-school-time programs.

Key features:

• Taxpayers may receive a federal income tax credit of up to $1,700 for contributions to Scholarship Granting Organizations (SGOs).
• The Governor must opt in for families in their state to benefit from the program.
• Scholarships are distributed by SGOs to K–12 students from families earning up to 300% of the area median income (approximately 90% of Massachusetts families). Individual SGOs may set additional eligibility requirements or income limits.

How It Works

• Taxpayers contribute to approved SGOs.
• In return, they receive a dollar-for-dollar federal tax credit of up to $1,700.
• Scholarships may be used for:
  • Tuition
  • Tutoring
  • Special education services
  • Books and educational technology
  • Transportation
  • Out-of-school-time or enrichment programs
• The U.S. Treasury is finalizing regulations; implementation begins January 2027.​