How to Claim the Federal Scholarship Tax Credit, Step by Step

The short version

1. Pledge now, so you're ready when giving opens.
2. On or after January 1, 2027, check that your SGO is on the IRS SGO list.
3. Give cash and designate the gift as a qualified contribution.
4. Keep the SGO's written acknowledgement. It arrives by January 31, 2028, and includes your unique donor number.
5. File Form 8525 with your 2027 federal return and enter each donor number.

That's it. The rest of this guide covers the details that can trip you up. Everything here follows Treasury's proposed rules published October 2, 2026. They aren't final, but donors may rely on them for gifts made on or after January 1, 2027, if they follow them consistently.

Step 1: Decide how much each person will give

The credit is capped at $1,700 per taxpayer per year. Under the proposed rules, each spouse on a joint return is a separate taxpayer. A married couple filing jointly can claim up to $3,400, but only if each spouse makes their own qualified contributions.

Check your expected tax first. The credit is nonrefundable, so it only helps if you owe federal income tax. Unused credit carries forward for five years.

If your state gives its own scholarship credit, the state credit is subtracted from your qualified contributions before the $1,700 cap. See how state credits stack and find your state's rules on our states opted in tracker.

Step 2: Choose an SGO that's on the IRS list

Only gifts to an organization on a covered state's SGO list qualify. The IRS plans to publish an IRS SGO list. Under proposed rule 1.25F-2(b), you may rely on an SGO's presence on that list at the time you give, unless you knew it didn't qualify or helped cause its removal.

• You can live anywhere. A donor in a state that hasn't opted in can give to a listed SGO in any state that has.
• States have until February 15, 2027, to submit their 2027 lists. If you give in early January, confirm your SGO appears on the IRS list first.
• Multistate SGOs keep a separate account for each state. You can tell them which state your gift should support.

Our checklist for choosing a scholarship fund covers what to look for: income limits, what the SGO funds, how fast it awards and how it handles overhead.

Step 3: Give cash and designate it

Cash only. The proposed rules define cash as currency, check, money order, electronic transfer (including credit or debit card), after-tax payroll deduction or similar methods, in U.S. dollars. Stock, crypto and other property don't qualify.

Designate the gift. When you give, you must tell the SGO that the gift (or a set part of it) is a qualified contribution. That tells the SGO to put it in its separate Section 25F account. Look for a checkbox or a line on the donation form, or put it in writing.

Give personally. Gifts made through your partnership or S corporation don't count toward your federal credit under the proposed rules.

Don't pick the student. SGOs can't earmark gifts for a particular child, so you can't direct your gift to a specific family.

Mind the timing. Gifts count in the calendar year you make them. There's no "give by April for last year" rule like some state programs have. A gift made January 5, 2028, counts toward 2028, not 2027.

Splitting a gift when you also want a state credit

If you give one amount and want both credits, the proposed ordering rule helps you. Any state credit is treated as coming first from the part of your gift you did not designate as qualified. Treasury's Example 4 shows a donor who gives $4,000, designates $1,700 as qualified and gets a $400 state credit. The full $1,700 federal credit survives.

Step 4: Keep the written acknowledgement

By January 31 of the year after you give, each SGO must send you a timely written acknowledgement with:

• the SGO's employer identification number (EIN)
• the total you designated as qualified contributions that year
• your unique donor number
• whether you received any goods or services in return, and a good-faith estimate of their value

The SGO may send it electronically if you agree. It also reports your name, address and total qualified contributions to the IRS under your donor number.

If you received a benefit, like a dinner ticket, its value comes off your qualified contribution.

Records to keep: the acknowledgement, your bank or card record of the gift, any state credit preapproval or receipt and a screenshot or printout showing the SGO on the IRS list on the date you gave.

Step 5: File Form 8525 with your return

Under the proposed rules, you claim the credit on Form 8525, Federal Scholarship Tax Credit (or a successor form), filed with your Form 1040. For each SGO, you report the unique donor number from its acknowledgement.

• Missing donor number? The IRS presumes you made no qualified contribution to that SGO. You can rebut it with the acknowledgement or other satisfactory proof within the time the IRS gives you.
• State credit too? The federal credit is reduced by any state credit allowed for the same qualified contributions, before the $1,700 cap. Expect the form to ask for that amount.
• Carryforward? If the credit is more than your tax after certain other personal credits, the extra carries forward up to five years, oldest first.
• No double dip. Don't also deduct the credited dollars on Schedule A. Only amounts above what earned the credit may be deductible.

The IRS had not published Form 8525 or its instructions as of October 2026. Tax software should support it for 2027 returns. If your preparer hasn't seen it yet, point them to the proposed rules (REG-117199-25).

Timeline for a 2027 gift

Mistakes to avoid

• Giving in 2026. Nothing given before January 1, 2027, qualifies.
• One spouse giving $3,400. The cap is per taxpayer. Each spouse needs their own gift.
• Forgetting to designate. An undesignated gift isn't a qualified contribution.
• Giving to a state-only organization. Some scholarship groups qualify for a state credit but aren't on a federal list. Those gifts don't earn the federal credit.
• Filing before the acknowledgement arrives. Wait for every donor number.
• Assuming the rules are final. Treasury may change details before final rules, expected no earlier than 2028 according to ExcelinEd's summary of Treasury officials' remarks.

Where Edulist fits

Edulist never handles donations. You give directly to the SGO, and the SGO sends your acknowledgement. Pledge on the donor page and we'll email you when giving opens, introduce you to SGOs with families waiting if you'd like and show what families are asking scholarships to pay for.

This guide reflects the statute and Treasury's proposed rules as of October 13, 2026. It is not tax advice. Ask your tax professional before you give.