The Federal Scholarship Tax Credit is set to take effect on January 1, 2027. The program lets taxpayers contribute up to $1,700 to a “scholarship-granting organization” and receive a dollar-for-dollar credit against their federal income taxes. Those organizations then redistribute the donated funds as scholarships to families for use toward additive supports for student learning. Eligibility extends to families earning up to 300% of their area’s median income.
While the program has been described as a private-school scholarship initiative, according to the fact sheet released by the U.S. Treasury public-school districts can tap into it as well. Scholarship Granting Organizations (SGOs), which must be nonprofit organizations located in the state, may direct funds toward education-related costs such as tutoring and afterschool enrichment. The tax credit has the potential to raise millions of dollars for families to purchase education-related services that support their students’ success.
On June 10th, the Treasury Department issued a preview of proposed rules, with full proposed regulations expected by the end of September 2026. Key details will include final guardrails on scholarship granting organizations and allowable uses of donor dollars.
States are required to opt-in to the program, and Kentucky did so through the passage of HB1(2026). The Secretary of State was authorized to submit a list of qualified SGOs to the IRS no later than November 30, 2026.
BUILDING A STATEWIDE SGO STRATEGY
FOR PUBLIC SCHOOL STUDENTS
Join us for a strategy meeting on building a statewide approach to scholarship granting organizations (SGOs) for Kentucky’s public-school students and families. This meeting will build a shared understanding of the opportunity presented by the credit, outline what we know and what we don’t know at this point about how the credit can be implemented, and begin to address ways in which the credit can be implemented for broadest impact. This will be a working meeting where your participation is valued.
SEPTEMBER 25, 2026
10AM - 3PM ET
Lexington, Kentucky
(more details to follow)
Cost: $100
(includes lunch, refreshments, and materials
related to the working discussion)
The meeting will convene stakeholders, including education, business, foundation, government, and community leaders to develop a coordinated statewide approach to establishing and supporting Scholarship Granting Organizations (SGOs) that direct donations toward K-12 scholarships benefiting public school students. With the Federal Scholarship Tax Credit taking effect in 2027, there is a timely opportunity to build an effective infrastructure that maximizes this tax policy change to positively impact Kentucky education.