The Federal Scholarship Tax Credit (FSTC) is different from traditional school choice programs because it is funded through private donations rather than direct government funding.
Through the FSTC, individuals can receive a federal tax credit for eligible donations made to approved Scholarship Granting Organizations (SGOs). These SGOs then award scholarships to eligible students to help cover qualified educational expenses.
Unlike many state-based school choice programs, the FSTC is a federal program, meaning it is designed to make scholarship opportunities available to eligible students across participating states.
Key Differences
Here are a few key differences:
Federally supported: The FSTC is established through federal law rather than an individual state's scholarship or voucher program.
Privately funded: Scholarship dollars come from individual donations to approved SGOs, not from a direct allocation of government funds to schools.
Donor-supported: Eligible taxpayers can receive a federal tax credit for qualified contributions to participating SGOs.
Flexible educational opportunities: Scholarships can help cover qualified educational expenses for eligible K–12 students, not just private school tuition.
SGO-administered: Approved SGOs manage donations, determine scholarship awards, and oversee the distribution of funds.
The FSTC is designed to create additional opportunities for students and families while bringing together donors, schools, and scholarship organizations to support education.
For more information, visit the IRS Federal Scholarship Tax Credit overview.