Education Freedom Tax Credit in Alaska: How Donors Give and Families Qualify

What is the Education Freedom Tax Credit and how can you qualify in Alaska?

The Education Freedom Tax Credit is the common name for the federal scholarship tax credit in Section 25F of the tax code. It pays you back, dollar for dollar, for cash you give to a scholarship granting organization (SGO). The cap is $1,700 per taxpayer per year, starting with gifts made on January 1, 2027.

As a donor, you qualify if you are a U.S. citizen or resident who owes federal income tax, you give cash to an SGO on Alaska's list (or any other covered state's list), and you designate the gift as a qualified contribution. You don't need to live in Alaska, and there is no donor income limit.

As a family, your child qualifies if your household income is at or below 300% of area median gross income and your child is eligible to enroll in an Alaska public school. Scholarships come from SGOs that Alaska lists.

Alaska's opt-in status

Alaska is opted in. Governor Mike Dunleavy signed the election in January 2026, and the Department of Education and Early Development (DEED) announced it on January 26. Alaska is on the IRS advance-election list.

Alaska has moved faster than most states on the next step. The state opened SGO applications on August 20, 2026, with nonprofits applying by email to SGO@alaska.gov. On October 2, 2026, the governor approved the first 20 organizations. Applications remain open on a rolling basis, and the state said it expects to send its final 2027 list to the IRS by December 1, 2026. The federal deadline under the proposed rules is February 15, 2027.

What it means for Alaska donors

Alaska has no individual income tax, so there is no state credit to stack and nothing to subtract. Every dollar you give, up to $1,700, counts toward the federal credit.

Worked example. A Fairbanks couple owes $9,000 in federal income tax for 2027. In January, each spouse gives $1,700 from their own account to an SGO on Alaska's list. They claim $3,400 on Form 8525, and their tax drops to $5,600. The $3,400 funds scholarships for Alaska students.

What it means for Alaska families

Alaska's main public funding for home learners is the correspondence-program allotment, which our Alaska scholarships guide covers. SGO scholarships are separate, private money. DEED's January announcement listed tuition and fees at private, charter, micro and home schools, plus dual enrollment, therapies, tutoring and supplies as possible uses. Federal guidance on qualified expenses is still coming, and each SGO sets its own rules within the law.

SGOs must give priority to returning scholarship students and then their siblings. The 300% limit is measured against your own area's median gross income, adjusted for family size, so it varies across the state.

Alaska timeline

• October 2, 2026: first 20 SGOs approved by the state.
• December 1, 2026: the state's target for sending its 2027 list to the IRS.
• January 1, 2027: credit-eligible giving begins.
• February 15, 2027: federal deadline for Alaska's 2027 SGO list.
• January 31, 2028: SGOs send donor acknowledgements for 2027 gifts.
• Spring 2028: claim the credit on your 2027 return.

How to give and claim

1. Choose an approved SGO. National groups such as ACE Scholarships and AAA Scholarship Foundation are on Alaska's first list. Confirm the organization is on the IRS SGO list when you give.
2. Give cash on or after January 1, 2027, and tell the SGO it's a qualified contribution for Alaska.
3. Keep the acknowledgement with your donor number.
4. File Form 8525. Our guide on how to claim the federal scholarship tax credit walks through it, and our checklist on how to donate to a scholarship fund helps you compare SGOs.

Edulist doesn't take donations. You give directly to the SGO. You can pledge on Edulist and we'll remind you when giving opens. This page reflects Treasury's proposed rules as of October 13, 2026. It is not tax advice; ask your tax professional.