South Carolina Scholarship Tax Credit: Giving to Exceptional SC

South Carolina's donor credit, in brief

South Carolina's donor-funded scholarship program is narrow but generous. Under South Carolina Code 12-6-3790, you can give to the Educational Credit for Exceptional Needs Children's Fund, run by the nonprofit Exceptional SC. You then take a state income tax credit equal to your gift. The fund pays private school tuition for children with documented disabilities or other qualifying conditions.

It is not a general K–12 scholarship credit. Gifts help one group of students: those with exceptional needs attending eligible private schools in South Carolina. The state's larger Education Scholarship Trust Fund, a separate state-funded program, isn't tied to donations at all. Families can read about both on South Carolina scholarships.

South Carolina is also one of the 30 states on the IRS advance-election list for the new federal scholarship tax credit. Governor Henry McMaster's decision was reported in January 2026.

Who can claim it

• Individuals with South Carolina income tax liability
• Corporations with South Carolina income tax liability
• Banks, against the bank tax under Chapter 11, Title 12

You can't designate a specific child or school as the beneficiary. A designated gift doesn't qualify for the credit.

Amounts and the statewide cap

The credit is nonrefundable. If you deduct the same gift on your federal return, South Carolina requires you to add that deduction back on your state return.

Preapproval and deadlines

South Carolina law sets an application process in which the order of receipt sets priority. In practice you pledge or donate through Exceptional SC, which says credits "will be processed in the order pledges were received." Exceptional SC accepts credit card gifts online, checks with its pledge form and stock through a secure link.

The credit must be claimed for the tax year the contribution is made. A gift on January 2 counts for that new year, not the year before. Once $12 million is committed, the year's credits are gone, so give early in the year.

How it stacks with the federal $1,700 credit

From January 1, 2027, any individual can claim up to $1,700 in federal credit for cash gifts to an SGO on the IRS list. Under Treasury's proposed rules, a state credit for the same qualified contribution is subtracted first, then the $1,700 cap applies.

Because South Carolina's credit is 100%, claiming it on the same dollars would erase the federal credit. Two other gaps matter:

• Which SGOs will be listed is still open. As of the Post and Courier's January 2026 report, the governor's office said it was too early to know which groups would be on South Carolina's list. Exceptional SC's tuition-only, exceptional-needs focus is allowed under federal rules, but it would still need to meet every federal test and be certified by the state.
• Stock counts for South Carolina, not for the federal credit. The federal credit is cash only.

Worked example. Dana owes $6,000 in South Carolina tax and $10,000 in federal tax for 2027.

• She gives $4,500 to Exceptional SC early in the year. That's the 75% limit on her $6,000 liability, so her South Carolina credit is $4,500.
• She gives $1,700 in cash to an SGO on the IRS list, designates it as a qualified contribution and claims no state credit on it.

Result: $4,500 back on her state return and $1,700 back on her federal return, $6,200 in credits for $6,200 given. If her husband gives his own $1,700, they can claim $3,400 federally on a joint return.

If Exceptional SC does appear on South Carolina's federal list, Treasury's ordering rule could also let one gift do both. Designate only $1,700 as qualified, and the state credit is applied first to the undesignated part. Confirm with your tax professional before relying on that.

How to give, step by step

1. Estimate your South Carolina tax and multiply by 75% to find your maximum credit.
2. Pledge or donate to Exceptional SC as early in the year as you can. Don't name a child or school.
3. Keep your receipt and claim the credit on your South Carolina return.
4. From January 2027, make a separate federal gift of up to $1,700 per spouse to an SGO on the IRS SGO list, and designate it as a qualified contribution. Our step-by-step guide to claiming the federal scholarship tax credit covers receipts and Form 8525.

Companies should also read business tax credit scholarships. Remember that the federal credit is for individuals only.

Choosing where to give

For the state credit, South Carolina has one fund: Exceptional SC. For the federal credit, you can choose any SGO listed by any opted-in state, including other states' SGOs if South Carolina's list is short. Our checklist for choosing a scholarship fund explains what to ask, and the states opted in tracker shows where federal SGOs will operate.

Edulist never handles donations. You give directly to the organization. Pledge on Edulist and we'll remind you when federal giving opens. This page reflects South Carolina law and Treasury's proposed rules as of October 13, 2026. It is not tax advice; ask your tax professional.