Florida will participate in a new federal program starting in 2027 that will allow taxpayers to receive a tax credit of up to $1,700 per year for making donations intended to fund scholarships for elementary and secondary school students.
However, there is a fundamental difference that families should be aware of: the $1,700 is not a check or a grant that the federal government provides directly to parents.
The tax benefit applies to the individual who contributes money to an authorized scholarship granting organization, known as Scholarship Granting Organization or SGO. These entities then use the contributions to fund educational expenses for eligible students.
The new Federal Scholarship Tax Credit, also known as the Education Freedom Tax Credit, will begin on January 1, 2027.
The IRS and the Department of the Treasury published proposed rules on October 1 to implement the program, created under section 25F of the Internal Revenue Code.
Up to $1,700 in credit for making a donation
According to the proposed rules, an eligible taxpayer may claim a federal credit equivalent to certain cash contributions made to an authorized SGO, with a maximum annual limit of $1,700.
For couples filing a joint declaration, the proposed rules allow for a combined credit of up to $3,400.
This means that, generally speaking, a person making a qualified contribution of $1,000 could use up to $1,000 as a credit against their federal tax, provided they meet all the program's requirements.
A contribution of $1,700 would allow for the maximum individual amount to be reached.
However, the benefit depends on the tax situation of each taxpayer.
It is not the same as a tax deduction
The new benefit is a tax credit, not just a deduction.
A deduction reduces the income on which taxes are calculated.
A credit, on the other hand, directly reduces the corresponding tax obligation, subject to the applicable rules and limits.
The credit for school scholarships is non-refundable. This means that it does not generate a refund that exceeds the tax owed by the taxpayer.
However, the rules allow for the transfer of certain unused amounts to subsequent periods for a maximum of five years.
You cannot use the same donation twice
A contribution that is used to claim the new federal credit cannot simultaneously be used as a charitable donation deductible under federal rules.
Additionally, when a taxpayer also receives a state tax credit for the same contribution, the federal credit may need to be reduced according to the rules established in section 25F.
The IRS included in its new regulations a system designed to coordinate both benefits.
Florida has already chosen to participate in the program
The participation of the states is voluntary.
Florida is officially listed among the states that have conducted an early election to participate in 2027, according to the official IRS list on the Federal Scholarship Tax Credit.
Governor Ron DeSantis previously announced Florida's joining of the program, which will complement the comprehensive state system of school choice and scholarships that is already in operation in the state.
But choosing to participate is only the first step.
Florida must provide the IRS with the list of organizations that meet the requirements to operate as SGO under the new federal program.
We still need to wait for the final list of organizations
This point is especially important before donating money.
Not every organization currently offering scholarships in Florida will automatically grant access to the federal credit of $1,700.
In order for a contribution to qualify, the entity must be included in the corresponding state list and meet the federal requirements.
The IRS is preparing a specific portal for states to submit those lists.
Therefore, before making a contribution starting in January 2027, it will be necessary to verify that the organization is indeed listed as eligible.
Florida already has organizations that manage school scholarships
Florida currently has approved entities to administer its state K-12 scholarship programs.
The Florida Department of Education includes among the authorized organizations for the 2026-2027 school year AAA Scholarship Foundation, Step Up For Students, and Sunshine State Kids.
However, that current state approval should not be automatically confused with the future federal certification under section 25F.
Florida will have to determine which organizations it will include on its federal list for 2027.
Donations cannot be reserved for a specific child
The program includes another significant limitation.
The donor cannot provide money to an NGO and stipulate that their contribution be used specifically to pay the tuition of their child, a relative, or any other designated student.
Organizations are prohibited from reserving or allocating qualified contributions for the benefit of a specific student chosen by the donor.
The scholarships must be managed by the organization in accordance with the program's criteria.
Who can receive the scholarships?
The scholarships are aimed at eligible students in primary and secondary education.
Legislation establishes a family income limit equivalent to up to 300% of the area's median gross income, adjusted according to household size and other criteria.
The proposed new rules include simplified mechanisms to verify the eligibility of certain low-income households, children in foster care, and students receiving specific educational services.
The Treasury and the IRS estimate that, with these rules, approximately 96% of minors in participating states could meet the economic criteria to receive scholarships from the program.
That does not mean that 96% will receive a scholarship. The availability will depend on the funds raised, the participating organizations, and the applications received.
What educational expenses can be covered?
The scholarship funds can be used for a variety of educational expenses for primary and secondary education.
The IRS mentions among them tuition at private schools, academic tutoring, services for students with special needs, books, school supplies, computers, and certain educational equipment.
There may also be other expenses related to the student's enrollment or attendance that meet the federal definition.
Organizations must allocate at least 90% of their revenue to scholarships for eligible students.
Scholarships do not have to be limited to private schools
Although much of the public debate has focused on private schools, the federal definition of eligible educational expenses is broader.
It may include certain expenses incurred in relation to public, private, or religious schools, as long as they are covered by federal regulations.
The proposed regulations also aim to prevent a participating state from imposing more restrictive requirements on organizations than those set by federal law regarding the type of school or eligible educational expenses.
Florida is already experiencing an expansion of school choice
The new federal program arrives in a state that already widely uses scholarships and school choice mechanisms.
CiberCuba reported in August that the public schools directly managed by Miami-Dade lost approximately 15,100 students at the beginning of the 2026-2027 school year, while private schools recorded high enrollment.
In Miami-Dade, approximately 60,850 private school students were benefiting from the state educational scholarship program at that time, according to data collected by CiberCuba.
The new federal credit now introduces another potential source of private funding for this scholarship ecosystem.
It is not necessary to live in Florida to donate to an organization in Florida
The proposed rules contain another striking detail.
A taxpayer does not necessarily have to reside in the same state as the organization to which they are making the contribution.
The IRS states that a person can donate to an eligible SGO located in any participating state and claim the federal credit, as long as the contribution meets the other requirements.
Therefore, a certified organization in Florida could receive qualified contributions from individuals residing outside the state.
What should families interested in receiving a scholarship do?
For now, families do not need to apply for this new federal tax credit, as the credit pertains to the donor.
Those interested in obtaining a scholarship will need to wait for Florida to complete its list of participating organizations and then check which entities accept applications from students for 2027.
Each SGO must verify household income and size and apply the corresponding eligibility rules.
Organizations should also prioritize students who have previously received one of their scholarships during the previous academic year, and subsequently, siblings of scholarship recipients.
What should someone do if they want to claim the $1,700?
The taxpayer must wait until January 1, 2027 and first verify which organizations appear on the corresponding official list.
The contribution must be made in cash to an eligible organization.
Afterwards, it will be necessary to keep the documentation that verifies the contribution and use it to claim the credit on the corresponding federal return.
The definitive rules for documentation and presentation will continue to be developed before the program begins.
The key is to clearly distinguish the two parts of the system: the taxpayer receives the tax credit for donating and the organization uses that money to fund scholarships for eligible students.
Florida has already chosen to participate. The next step will be to determine which organizations will be officially authorized when the new program begins on January 1, 2027.
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