Federal Scholarship Tax Credit: How to Help Your State Opt In

The federal scholarship tax credit is now law, but whether or not families in your state will benefit from it hinges on one key decision: Will your state opt in? 

While Gov. Polis of Colorado has called this a “no-brainer,” many states have yet to opt in. Keep track of whether or not your state will participate via live updates on Ballotopedia or on the IRS list of states that have already opted in. 

Why is this such a battle? First, there appears to be a division along party lines. Second, unlike many federal programs, this one requires action at the state level. And advocacy groups, citizens, and politicians alike are doing everything from writing letters to governors and legislators to raising awareness through social media campaigns. 

Why this may be a “no-brainer”? If your state opts in to the federal scholarship tax credit program, students gain access to new educational resources. If it doesn’t, those opportunities may continue to be limited and benefits will flow to other states.

To learn more about the state opt-in process and how you can help, keep reading.

Why State Opt-In Matters

The federal scholarship tax credit allows individuals to receive up to $1,700 in federal tax credits when they donate to Scholarship Granting Organizations (SGOs).

Those scholarships are then used to support qualifying K-12 student recipients through funding that can be applied to:

• tutoring
• special education services
• school supplies and technology
• tuition assistance
• educational technology and other educational needs

This program is funded through private donations, not state budgets. It allows taxpayers to redirect a portion of what they would owe in federal taxes to support education.

However, for this to work, each state must make an advance election to participate and identify and approve eligible SGOs.

Some projections estimate that even modest participation could generate hundreds of millions—and potentially billions—of dollars annually in educational support nationwide. But none of that educational funding is available to students in states whose governors decide not to opt in. That’s why advocacy is so important.

Features to Highlight When Advocating

When advocating, it helps to understand and communicate the details that make this program so unique:

• No cost to state budgets
• Funded through voluntary donations
• Available to a broad range of families
• Supports public, private, and homeschool students

The education of our students should never be political. This is a win-win cause that everyone can and should get behind, and people on both sides of the political spectrum are beginning to recognize that. Keep reading to learn the practical steps you can take to support this cause.

Encourage Your State to Opt In

Advocacy does not need to be complicated. Here are a few practical ways to get involved:

1. Contact Your Governor Directly

The governor (or a designated official) is typically responsible for opting the state into the federal scholarship tax credit. You can:

• Use the governor’s official contact form
• Call their office
• Reach out to their advisors, specifically, education, policy, or tax advisors

Keep your message short, sweet, and respectful:

• Ask the state to opt in before the 2027 rollout
• Mention that participation requires sending a list of designated SGOs to the Dept of the Treasury
• Highlight that this program brings funding into the state that benefits public, private, and homeschooled children.

Even brief, respectful messages can make a difference—especially when many people speak up. Below is a simple template you can use when contacting your governor or state officials:

Subject: Support for [State’s] Participation in the Federal Scholarship Tax Credit

Dear [Governor/Official’s Name],

I am writing to respectfully encourage you to support our state’s participation in the federal scholarship tax credit program.

This program presents an opportunity to expand educational resources for students across our state at no cost to the state budget. By allowing taxpayers to redirect a portion of their federal tax liability to Scholarship Granting Organizations (SGOs), this initiative can generate new funding for tutoring, special education services, school supplies, and other critical educational needs.

Importantly, this program is designed to support students in a variety of educational settings, including public, private, and homeschool environments. It offers flexibility for families while strengthening the overall education landscape.

I also understand that if our state does not opt in, these potential resources may instead flow to other states that choose to participate.

For these reasons, I respectfully ask you to fill out this IRS form to opt  [State] into the federal scholarship tax credit program and to support efforts that make implementation successful for students and families. 

Thank you for your time and for your continued commitment to education in our state.

Sincerely,
[Your Name]
[City, State]

2. Join Organized Advocacy Campaigns

You don’t have to do this alone. Many organizations are already working to raise awareness and encourage states to opt in, including the American Federation for Children and Invest in Education. Watch this brief video to learn more. These groups and others often provide opportunities for advocacy.

Their messaging typically focuses on increasing access to educational resources, helping families fund services like tutoring, and expanding opportunities—all without requiring new state spending.

3. Work Through Legislators and Local Leaders

While the governor makes the final decision, state legislators and community leaders can influence that process. Consider:

• Reaching out to state legislators—particularly those on key committees
• Encouraging public support through statements or resolutions
• Asking community leaders to speak in favor of participation

Local organizations, schools, and programs can strengthen the message by sharing real examples of student needs and potential impact.

4. Use Media and Public Awareness

Public awareness can play a powerful role in shaping decisions. Here are some ways to get involved:

• Write an op-ed or letter to the editor of a local newspaper
• Post and share information online, like our blog: How the New Federal SGO Tax Credit Benefits Students in Every Learning Environment
• Start conversations in your community

When communicating about this topic, focus on what matters most: this program helps provide additional educational support for qualifying students across public, private, and homeschool settings. It gives families more flexibility to access resources like tutoring, technology, and specialized services based on their child’s needs.

Keeping the message centered on students makes it easier for others to understand its value.

FAQs

Final Thoughts

The federal scholarship tax credit represents a new way to support students—but its impact depends on whether states choose to opt in. The good news is that advocacy doesn’t require specialized knowledge. It starts with awareness, conversation, and a willingness to engage.

For individuals or organizations looking to go beyond advocacy, whether by creating Scholarship Granting Organizations (SGOs) or making donations, Gammon & Grange can help! We’ve supported and advocated for this program since it was first introduced, and one of our knowledgeable tax attorneys can help you navigate both the legal and practical aspects as the program continues to take shape.

With increased awareness and thoughtful action, this opportunity can help expand educational access for students across your state.

The information on this site is for general informational purposes only and is not legal advice. Federal and state requirements, rules, and guidelines may change at any time and can vary by jurisdiction. You should consult qualified legal counsel for advice tailored to your specific situation and circumstances.