AFPI Urges Governors to Opt In to Education Freedom Tax Credit Immediately in 2026

WASHINGTON, D.C.—The America First Policy Institute (AFPI) applauds last week’s announcement from the U.S. Department of Treasury (Treasury) and the Internal Revenue Service (IRS). States can opt in to receive the federal education freedom tax credit as early as January 1, 2026.

This decisive action by the IRS and Treasury clears the path for states to act quickly and ensure their families can benefit from this historic opportunity.

The Working Families Tax Cuts Act, passed on July 4 of this year, created the first-ever federal tax credit for K-12 scholarships, allowing taxpayers to claim up to $1,700 for donations to Scholarship Granting Organizations (SGOs). Scholarships awarded by SGOs can be used on a range of educational expenses, including private school tuition and homeschooling.

SGOs can only receive donations in states that formally opt in. If states do not opt in, charitable dollars meant for local students will flow across state lines to benefit students in other communities.

Erika Donalds, chair for Education Opportunity at AFPI, shared her excitement, and urged state governors to seize this opportunity straight away:

“I am calling on every governor to opt in immediately after January 1. States that move quickly will send a clear signal to families, education entrepreneurs, and donors that opportunity is coming—and that their state intends to lead. Every day of delay risks sending charitable dollars and educational innovation elsewhere, instead of putting students first.”

The Trump Administration is allowing states to opt in to these tax credits before final tax credit regulations are issued—maximizing the number of states that can participate from day one. The more states that choose to participate, the more scholarships will be awarded to students. These scholarships will empower parents and families to find the best learning environment for their children.

Students can begin receiving federal tax credit funded scholarships from SGOs on January 1, 2027.