Is There a Homeschool Tax Credit? What Homeschool Families Need to Know

Bottom line up front: there’s no formal federal homeschool tax credit dedicated exclusively to homeschool expenses. But the new federal scholarship tax credit program launching in 2027 can help many homeschool families with scholarships to help cover the costs of their homeschool education.

You may have heard about the education tax credits in President Trump’s One Big Beautiful Bill and wondered whether there’s finally one available for homeschoolers. Technically, it depends. The Education Freedom Tax Credit is designed to benefit people who donate to Scholarship Granting Organizations (SGOs), not to families for their own children. But the part that does apply to homeschool families is that those supported scholarships may be available to eligible homeschool families. Let me explain.

How The Education Freedom Tax Credit Can Help Homeschool Families

The Education Freedom Tax Credit was created under Section 25F of the 2025 tax law, and it takes effect for donations made starting January 1, 2027. When someone donates to an SGO, that organization pools the money and awards scholarships to families who have applied and are eligible. That can include homeschool families. A scholarship can help cover curriculum and instructional materials, tutoring, standardized test fees, dual enrollment, educational therapies, technology costs, and more.

As the rules around the program become solidified, there are three important things to remember:

• Your state has to opt in. The credit is only applicable to donors in “covered States” that have elected to participate. Currently, more than half the states have opted in, and the number keeps changing. Check the current list on the IRS’s Federal Scholarship Tax Credit page to stay up to date with the status of your state. Read Federal Scholarship Tax Credit: How to Help Your State Opt In to learn about how you can encourage your state to participate.
• Your state has to either consider homeschool a legal “school,” or eligible expenses must be incurred in connection with enrollment or attendance at a legal “school.” Each state has its own definitions and regulations. Here is a good resource from the Department of Education.
• The rules are still being finalized. Temporary and proposed regulations have been published here and here.

So far, this has all been about what your family might receive. But there’s another side to this program worth knowing about: the scholarships only exist if people fund them. And that’s something anyone can be a part of.

Want to Make This Possible for Other Families?

Every scholarship a homeschool family receives is paid for by someone’s donation or “redirection” of federal tax liability — and that someone can be from any state. Give to a qualifying SGO, and you not only help fund a child’s education, but you receive the Education Freedom Tax Credit in return, as this is available regardless of where the taxpayer lives. However, only students in covered States can benefit. That’s a federal credit of up to $1,700 (or $3,400 for a married couple filing jointly) for every dollar donated.

But some people may want to go further than donating. If you have a heart for a particular kind of education, you can help direct where this support goes by starting an SGO of your own. That’s a bigger commitment, and it’s where I spend much of my time helping people. Here’s what it involves.

Why and How to Start an SGO

I’ve advised many different kinds of people on how to start an SGO, everyone from a retired educator still wanting to make an impact in his community to a principal at a small private school hoping to raise up students strong in their faith. Anyone with a passion for education and a skill for administration is a great candidate. 

There is no better time than now! The Treasury Department and the IRS have estimated that more than 11 million taxpayers will make qualified contributions totaling $26 billion to SGOs annually by 2030. Starting an SGO allows you to support the specific kind of education you believe in: classical, Christian or faith-based, or even homeschooling. The biggest barrier for most families interested in these options is simply cost, and a scholarship provided by an SGO is a way to lower those costs and give those families a real choice.

Of course, starting an SGO does come with responsibilities. First, the SGO has to become incorporated and put bylaws in place. Then, it must apply for tax-exempt status. Once approved and registered with the state, an SGO has to follow the program’s rules regarding the administration of scholarships. These include awarding scholarships across more than one school (it can’t exist just to fund a single one), serving a minimum number of students, staying independent from the schools it supports (a school’s board can’t also run the SGO), and keeping up with audits, reporting, and donor acknowledgments. Up to 10% of an SGO’s income can cover these administrative costs. It will also be subject to yearly internal or independent audits, depending on how much in donations it is taking in. A tax attorney can help you make sense of it all and ensure compliance. 

An SGO can be set up in any state. However, it can only benefit “eligible students” in covered States, and it must be “located in” a covered State, meaning it has to satisfy the state’s laws for business requirements and charitable registration requirements and meet the requirements for the State’s SGO List. Please reach out to me for a free consultation.

FAQs about Homeschool Tax Credits

How I Can Help Bring Your Vision for Education to Life

This is a topic close to my heart because I raised four children and have been an educator and a nonprofit leader. I recently spoke on this topic as the Tax Law workshop presenter at the  Christian Legal Society Conference. If you have a heart for homeschooling or any other type of K-12 children in focused areas or services and you’re considering starting or partnering with an existing SGO, please reach out to me, Jennifer Kim Nguyen, at Gammon & Grange. I’d love to help.

This post provides general information about a developing area of tax law and is for informational purposes only. Program rules are still being finalized, figures and state participation change, and every situation is different. This is not legal or tax advice and does not create an attorney-client relationship. Please consult a qualified professional about your specific circumstances.