Straight answers about the credit.
The Education Freedom Tax Credit (EFTC) is new, and most of what people have heard about it is secondhand. Here is how it works, in plain words, with the source under each answer for anyone who wants to check.
Under proposed rules. As of October 18, 2026.
The basics
What is the credit?
The Education Freedom Tax Credit, created by Internal Revenue Code § 25F, is a federal tax credit for cash gifts to scholarship granting organizations (SGOs). ECF is a Tennessee SGO in formation and is not on Tennessee's list yet. SGOs use the gifts to fund K-12 scholarships. The credit is up to $1,700 per individual; up to $3,400 for a married couple filing jointly if each spouse gives $1,700, under proposed rules, limited to the federal income tax you owe.
One detail matters at the moment you give: you tell the SGO that your gift is meant for the credit. That choice cannot be changed later.
Who can claim it?
Any U.S. citizen or resident who gives cash to an eligible SGO. You do not need to itemize, and you can live in any state.
What does "nonrefundable" mean?
The credit can lower the federal income tax you owe, all the way to zero. Anything above what you owe is not paid out to you. It carries forward instead, for up to five years. The calculator shows what you could use for 2027 and what carries forward.
How does it work for married couples?
The credit is up to $1,700 per individual; up to $3,400 for a married couple filing jointly if each spouse gives $1,700, under proposed rules. On a joint return, each spouse has their own limit of up to $1,700. Each spouse makes their own gift, so a couple reaches $3,400 only when each gives $1,700. A spouse who gives more than $1,700 still gets at most $1,700.
ECF gives each spouse their own donor number and receipt. The rules do not say how a gift from a joint account is split, so ask your tax professional before giving from one.
What if I owe less than the credit?
Whatever you cannot use in the year you give carries forward for up to five years, oldest first.
Does my state have to take part?
No. Your own state does not have to take part. The SGO's state does: a gift counts only if it goes to an SGO on the list of a state that has opted in. Tennessee has opted in, so donors from any state can give to a Tennessee SGO, once that SGO is on Tennessee's list.
Can I pick the student who gets a scholarship?
No. No donor ever chooses or names a student. An independent selection committee, which never sees donor names, chooses recipients.
Can I designate a school?
Yes. A donor may name a preferred qualifying Christian school. Donors cannot choose scholarship recipients or earmark gifts for individual students.
How big are scholarships, and who qualifies?
Scholarships cover up to 90% of tuition for families at the lowest incomes, stepping down to up to 75% and then up to 50% as income rises. Not every family receives 90%, and every family pays part of tuition. Federal law sets a higher income cap. ECF's policy caps new awards at 200%. Renewals follow the income limit and school requirements in place at renewal (the federal cap), as funds allow.
I live in a state with its own scholarship tax credit. How do they interact?
If you claim a state credit for the same gift, your federal credit is reduced by that amount. Under the proposed rules, if you give more than the amount you claim the federal credit on, the state credit is applied to the extra first, which protects your federal credit. You also cannot take a federal charitable deduction for the part of a gift used for this credit. Ask your tax professional how your state's program fits.
Can I give to ECF now?
Not yet. Education Choice Fund is a 501(c)(3) public charity (EIN 42-4473313). Gifts count for the credit only once ECF is on Tennessee's SGO list, and only for gifts made on or after January 1, 2027. We are not accepting gifts or pledges yet. Sign up for updates and we will tell you when that changes.
Fair questions. Honest answers.
Is this a voucher?
No. A voucher is a government payment toward tuition. Under the EFTC, no government check goes to any family or school. People choose to make private gifts to a nonprofit SGO, and the SGO awards the scholarships. Donors may then claim a federal tax credit of up to $1,700 per individual; up to $3,400 for a married couple filing jointly if each spouse gives $1,700, under proposed rules, limited to the federal income tax they owe.
Does it take money from public schools?
Most public school money comes from state and local sources. In the 2022-23 school year, 12.9% of public school revenue nationwide came from federal sources, 45.1% from states and 42.0% from local sources. In Tennessee the federal share was 18.5%. (The federal figures include COVID-19 relief funds.) The EFTC is a federal income tax credit for private gifts. It takes nothing out of any public school's budget and changes nothing in Tennessee's school funding formula, TISA, which keeps funding public schools for every student they serve.
Is it a tax break for the rich?
The cap is the same for everyone, whatever the donor's income: up to $1,700 per individual; up to $3,400 for a married couple filing jointly if each spouse gives $1,700, under proposed rules. Scholarships go by family income. ECF's policy caps new awards at 200% of area median income, and awards are up to 90% of tuition at the lowest incomes, stepping down to up to 75% and up to 50% as income rises.
Is this public money for religious schools?
The gifts are private. Individuals choose to give their own money to a nonprofit SGO, and families choose their school. No government agency picks a school or sends a school a check. Looking at Arizona's state scholarship tax credit, the U.S. Supreme Court wrote that when taxpayers give to scholarship organizations, "they spend their own money, not money the State has collected from respondents or from other taxpayers." The Court decided that case on standing, meaning whether the challengers could bring the suit, not on the full constitutional question.
Under proposed rules. As of October 18, 2026. Final rules have not been issued and may change. Education Choice Fund is a 501(c)(3) public charity (EIN 42-4473313).