Education Freedom Tax Credit in Idaho: Donor Credit vs. the Parental Choice Tax Credit

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

The Education Freedom Tax Credit is the federal scholarship tax credit in Section 25F of the tax code. It rewards donors. You give cash to a scholarship granting organization (SGO), and your federal income tax goes down by the same amount, up to $1,700 a year. It starts with gifts made on January 1, 2027.

Donors qualify if they are U.S. citizens or residents who owe federal income tax and give cash to an SGO on Idaho's list, or any covered state's list. You designate the gift as a qualified contribution. You don't need to live in Idaho.

Families qualify for the scholarships if household income is at or below 300% of area median gross income and the child is eligible to enroll in an Idaho public school.

Two Idaho credits that people mix up

Idaho families often hear about two "school choice tax credits." They work in opposite directions.

The Parental Choice Tax Credit doesn't reduce your federal credit as a donor, because it isn't a credit for a donation. Our Idaho scholarships guide covers it in detail.

Idaho's opt-in status

Idaho is opted in. Idaho Education News reported in January 2026 that Governor Brad Little had sent Idaho's opt-in form to the IRS. Idaho is on the IRS advance-election list updated September 14, 2026.

Idaho hasn't published an SGO list. The same report said the state may still need a law to set up its SGO process. Under Treasury's proposed rules, Idaho's 2027 list is due by February 15, 2027.

What it means for Idaho donors

Idaho has a state income tax but no donor scholarship tax credit. In most cases, your full gift up to $1,700 counts toward the federal credit.

One edge case: Idaho Code 63-3029A gives a 50% credit, up to $500 for individuals, for gifts to Idaho schools, school foundations, libraries and museums. Scholarship organizations aren't on its list. If you ever claimed that credit on a gift that was also a federal qualified contribution, Treasury's proposed rules would subtract it before the $1,700 cap.

Worked example. A Boise parent claims the Parental Choice Tax Credit for her son's microschool tuition. In 2027 she also gives $1,700 to an SGO on Idaho's list. The two credits don't touch: she claims the Idaho credit on her state return and the $1,700 federal credit on Form 8525.

What it means for Idaho families

SGO scholarships may help families the Parental Choice Tax Credit doesn't reach. For example, the state credit can't be used for any semester a child is enrolled in public school. Federal-credit scholarships, by contrast, can serve public school students, for things like academic tutoring. Qualified expenses also include tuition, books, supplies, special needs services and computer technology. Each SGO decides what it funds, and Treasury's guidance on homeschool costs is still coming.

Idaho timeline

• January 1, 2027: credit-eligible giving begins.
• February 15, 2027: Idaho's 2027 SGO list due to the IRS.
• January 31, 2028: SGO acknowledgements for 2027 gifts.
• Spring 2028: claim on your 2027 return.

How to give and claim

1. Wait for Idaho's SGO list, then check the IRS SGO list when you give. Or give to an SGO listed by another covered state; see the states opted in tracker.
2. Give cash on or after January 1, 2027, and designate it for Idaho. Spouses each give separately.
3. Keep the acknowledgement with your donor number.
4. File Form 8525. Our guide on how to claim the federal scholarship tax credit explains each step, and our checklist helps you donate to a scholarship fund. Browse the SGO directory as Idaho organizations join.

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