What Homeschool Families Can Actually Do With the Federal Tax-Credit Scholarship in 2027

The short version

On January 1, 2027, the first federal tax-credit scholarship program takes effect. Section 70411 of P.L. 119-21, the reconciliation law signed July 4, 2025, created a new Section 25F of the Internal Revenue Code that works in three steps: an individual gives cash to a scholarship granting organization, or SGO; the donor claims a dollar-for-dollar federal tax credit of up to $1,700 per year; and the SGO turns the pooled donations into scholarships for K–12 students in that state (CRS R48724). The credit applies to taxable years beginning January 1, 2027, which means the first returns claiming it will be filed in 2028.

For homeschool families, the credit is the smaller half of the story. The larger half is the scholarship, and whether homeschool expenses can be paid with one comes down to a single sentence of federal law that defers to state law. Treasury’s preliminary answer, given in a June 2026 preview of forthcoming regulations, is that a home school is treated as a school “if it is treated as a school under State law” (Treasury preview). That position is not final. Proposed regulations were promised no later than the end of September 2026 and had not been published as of mid-August 2026.

Thirty states had filed advance elections to participate, per the IRS’s official list dated July 24, 2026, retrieved August 2026 (IRS). The count was 27 on June 8 (IR-2026-76), and it keeps moving. Private trackers disagree with the official list and with each other, which this guide addresses below.

How the credit-to-scholarship pipeline works

The donor side

Only individuals can claim the credit. A claimant must be a citizen or resident of the United States, and corporations are excluded (Notice 2025-70). The contribution must be cash rather than stock or property, must go to an SGO on a participating state’s list, and the SGO must use it to fund scholarships inside the state where it is listed (Notice 2025-70). The cap is exact: the credit “allowed to any taxpayer for any taxable year may not exceed $1,700,” per the codified statute, retrieved August 2026 (26 U.S.C. §25F).

Three design details matter for household planning. The credit is nonrefundable, but unused amounts carry forward up to five years, applied first-in-first-out (Notice 2025-70). It is reduced by any credit the donor receives on a state return for the same contribution, and a gift claimed for the federal credit cannot also be taken as a charitable deduction (Notice 2025-70). And it is permanent; the statute contains no sunset date (§25F).

The recipient side

Scholarships go to “eligible students”: members of a household whose income for the calendar year before the scholarship application is not greater than 300 percent of area median gross income, who are eligible to enroll in a public elementary or secondary school (§25F). The benchmark is area median income, not the federal poverty level, a distinction some early coverage got wrong. No official threshold tables for this program had been published as of August 2026, so a family cannot yet compute its eligibility to the dollar (CRS R48724). Scholarship money a family receives is excluded from gross income under a companion provision, new Section 139K (CRS R48724).

The organizations in the middle are tightly specified. An SGO must be a 501(c)(3) public charity rather than a private foundation, keep Section 25F contributions in separate accounts, spend at least 90 percent of its income on scholarships, serve ten or more students who do not all attend the same school, verify household income and family size against the income limit, give priority to students who received a scholarship the previous year and then to their siblings, and refuse donations earmarked for a particular child (Notice 2025-70).

The credit belongs to the donor. The scholarship belongs to the family. A homeschool household can occupy both roles in the same year, but the rules, the caps, and the open questions are different on each side.

The homeschool hinge: one sentence of state law

Section 25F does not carry its own list of qualified expenses. It cross-references Section 530(b)(3)(A), the Coverdell education savings account definition of elementary and secondary expenses: tuition, fees, academic tutoring, special needs services, books, supplies, and other equipment “incurred in connection with the enrollment or attendance of the designated beneficiary as an elementary or secondary school student at a public, private, or religious school,” plus room and board, uniforms, transportation, and supplementary items and services required or provided by such a school, plus computer technology, equipment, and internet access used by the student and family during school years (26 U.S.C. §530, retrieved August 2026).

Everything therefore depends on what counts as a school. Section 530(b)(3)(B) defines one as “any school which provides elementary education or secondary education (kindergarten through grade 12), as determined under State law” (§530(b)(3)(B)). Those last five words carry more weight for homeschool families than anything else in the program. Federal law does not decide whether a home school is a school. State law does.

Treasury addressed the question directly on June 9, 2026, in remarks by Deputy Assistant Secretary for Tax Policy Kevin Salinger previewing the forthcoming regulations: “Accordingly, a home school would be treated as a school if it is treated as a school under State law.” The same document says the proposed rules will define “school” consistent with Section 530 to include public, private, and religious K–12 schools as determined under state law, and will clarify that schools operated by federally recognized Tribes qualify (Treasury preview; press release). This is a previewed position, explicitly subject to ongoing legal review, not a final rule. The proposed regulations were promised “no later than the end of September” 2026, and Treasury says states, SGOs, and taxpayers will be able to rely on them for tax year 2027.

What the hinge looks like on the ground varies by statute book. North Carolina defines a home school as “a nonpublic school consisting of the children of not more than two families or households” (N.C.G.S. §115C-563). In a state with that structure, Treasury’s previewed position points toward eligibility. In states that regulate home education as its own legal category rather than as a school, the question is genuinely open until the regulations and, likely, state-level determinations resolve it. The state-by-state homeschool law guide catalogs which legal structure each state uses.

The correct formulation as of August 2026 is therefore not “homeschool expenses qualify.” It is: homeschool expenses can qualify only where the family’s homeschool is treated as a school under that state’s law, per Treasury’s June preview, and the expense-scope rules are still unwritten.

On scope, Treasury says it “fully intend[s] that scholarships may be used to support additive academic tutoring and special needs services,” but the detailed expense guidance under Section 530 is a separate workstream that will follow the Section 25F regulations (Treasury preview). There is no authoritative federal list yet of which homeschool line items qualify. State coverage offers a preview of the expected shape: reporting on North Carolina’s opt-in law describes SGO scholarships as usable for “tuition, tutoring, dual enrollment, special education therapies, transportation, curriculum materials, testing fees, and other qualified educational expenses” (Carolina Journal), though the federal definition, not the state bill’s framing, will control.

Which states are in, as of August 2026

Participation is opt-in, state by state. A state joins by filing Form 15714, the advance election created by Rev. Proc. 2026-6; the IRS opened that process for filings on or after January 1, 2026, after announcing it together with Notice 2025-70 in December 2025 (IRS). The election is made by “the Governor of the State or by such other individual, agency, or entity as is designated under State law to make such elections on behalf of the State with respect to Federal tax benefits” (Notice 2025-70), a clause with practical consequences described below.

The authoritative roster is the IRS’s own Federal Scholarship Tax Credit page, which showed 30 states with advance elections for 2027 on its list current as of July 24, 2026, retrieved August 2026 (IRS FSTC page), up from 27 on June 8, 2026 (IR-2026-76).

A note on trackers, because the counts circulating online do not match. The Defense of Freedom Institute’s tracker showed 27 advance elections when retrieved in August 2026 (DFI), while a commercial tracker at eftccredit.com claimed 30 states opted in as of August 13, 2026 (eftccredit.com). The IRS page is the primary source and the one to check directly; every count in this guide carries its retrieval date because the total has moved nearly month to month.

How the states got in

Virginia moved first. Gov. Glenn Youngkin announced submission of Form 15714 on January 9, 2026, with an initial list of eight SGOs, and five more were added on January 16 (Ballotpedia News; WVVA). Democrat Abigail Spanberger was sworn in as governor the next day, and Virginia remained on the IRS list through July 24, an early sign that an election can outlast the administration that filed it. Mississippi announced participation on January 19 and Georgia on January 20 (Ballotpedia News). Colorado’s Jared Polis filed in January as well, making Colorado the only Democratic-led state on the July 24 list (Chalkbeat).

Three states joined over a governor’s veto. North Carolina overrode Gov. Josh Stein’s veto of House Bill 87, the House on May 20, 2026 (73-46) and the Senate on June 3 (30-19); the State Education Assistance Authority, the agency that already runs the Opportunity Scholarship, will maintain the approved-SGO list (Carolina Journal). Kentucky’s legislature overrode Gov. Andy Beshear in March, 77-14 in the House on March 16 and 31-5 in the Senate on March 17, using a bill that assigns the annual election to the secretary of state, the designated-entity route around a governor who objects (Ballotpedia News). Kansas overrode Gov. Laura Kelly’s April 8 veto of SB 361, 85-38 in the House and 29-10 in the Senate (The Sentinel).

How a family will actually apply

Families will not apply to the IRS, and not to their state. The pipeline in the statute runs through the SGO: once a state’s 2027 SGO list is final, a family applies directly to a listed organization, which verifies household income and family size, applies the priority rules, and pays scholarships only for qualified Section 530(b)(3)(A) expenses (Notice 2025-70).

What is already known about that application:

• Income documentation.Treasury’s previewed verification options are direct documentation (paystubs, tax returns, IRS transcripts, or W-2s), categorical eligibility through household participation in a needs-based government program with income limits at or below the threshold, and a safe harbor treating foster children as income-eligible without separate verification (Treasury preview). Previewed, not final, but a reasonable picture of the paperwork to have ready.
• Priority order. Students who received a scholarship the prior year come first, then their siblings, and no donation can be earmarked for a particular child (Notice 2025-70).
• Timing floor. Contributions and scholarships can begin January 1, 2027, and each participating state must deliver its SGO list to Treasury by a date, still unspecified, before that (Notice 2025-70).

Virginia is furthest along, with 13 SGOs designated as of January 16, 2026, the earliest concrete answer to the question of which organization a family will actually apply to (WVVA). Any named roster can change before launch, since states must delist noncompliant organizations. North Carolina families have a single agency to watch for the approved list, the SEAA (Carolina Journal). Administrators of existing state programs expect shared-application and digital-wallet models to carry over, on the pattern of Missouri’s single family application connected to multiple funding sources, though no federal family-application procedure existed as of an April 2026 industry writeup (ClassWallet), and that source is a vendor describing its own market.

No SGO had opened a Section 25F scholarship application as of mid-August 2026, so specific windows cannot be stated. Given the deadline structure in Notice 2025-70, realistic first application windows run from late-2026 pre-enrollment into 2027 and will vary by organization (Notice 2025-70).

For the family members who plan to donate as well: Treasury’s preview describes an acknowledgment system in which the SGO issues each donor a written acknowledgment carrying a unique donor number generated under an IRS-provided method; the SGO reports contributions to the IRS by that number, and the taxpayer generally reports the same number on the federal return, so donors never hand a Social Security number to the SGO (Treasury preview). The practical takeaway for 2027 donors is to keep the SGO acknowledgment with the year’s tax records. Notice 2025-70 adds a protection: a donor who gives to an organization on the state list at the time of the gift is generally treated as having contributed to an SGO even if the organization later loses its status, unless the donor was aware of or responsible for the disqualifying conduct (Notice 2025-70).

What is still unknown

An honest list matters more here than in most guides, because the program launches in less than five months and the rules are not final. As of mid-August 2026, all of the following are open:

1. The proposed regulations themselves.Treasury committed to publishing them “no later than the end of September” 2026; nothing had been published by mid-August, and every position in the June preview is explicitly subject to ongoing legal review (Treasury preview).
2. What “income” and “household” mean. CRS notes the statute does not define either term for the 300-percent-of-area-median-income test, and no public calculator or published threshold tables existed as of August 2026, so families cannot yet definitively compute their own eligibility (CRS R48724).
3. The married-filing-jointly question.Whether a couple filing jointly is one taxpayer with a $1,700 cap or two with $3,400 is unresolved in public guidance; CRS describes the cap as $1,700 “regardless of filing status” (CRS). This guide publishes no couples figure until the regulations or form instructions settle it.
4. The state deadline. The exact 2026 date by which states must perfect their elections by submitting SGO lists was left to future guidance (IRS).
5. The expense list, including homeschool line items. The Section 530 expense-scope guidance is a separate workstream that follows the 25F regulations (Treasury preview). Scholarship amounts are also unset: the codified statute sets no per-scholarship cap, so award sizes will be SGO decisions (§25F).
6. How federal scholarships stack with state aid. CRS notes the statute is silent on how the federal scholarships interact with other assistance, including state ESAs and vouchers (CRS). More on this below.
7. The political durability question, in context. Sen. Mark Kelly introduced S. 4297, the Keep Public Funds in Public Schools Act, on April 15, 2026 with 31 cosponsors to repeal the program; it sits in Senate Finance with passage unlikely under the current Republican-controlled Congress (Ballotpedia News). The statute itself is permanent. Durable but contested is the fair description.

How it layers on state ESAs

The federal scholarship is a second layer, not a replacement. A state ESA draws on state funds under state rules; a Section 25F scholarship is privately donated money, federally credited, routed through an SGO. Both can exist in the same state in 2027. Texas and West Virginia both appear on the July 24 IRS list (IRS), which means families there will face a state program and a federal scholarship layer side by side; the state programs are covered in depth in the Texas TEFA guide and the West Virginia Hope Scholarship guide, and the national picture in the ESA-by-state guide.

Two interaction rules are already known, both on the donor side. The federal credit is reduced by any state tax credit received for the same contribution, so in states that run their own tax-credit scholarship programs a donor cannot collect both in full, and the same gift cannot double as a charitable deduction (Notice 2025-70). The recipient-side interaction is the unknown that matters most to homeschool families already drawing state funds: whether accepting a 25F scholarship affects a family’s state ESA eligibility or amounts has no federal answer yet, because the statute is silent on the interaction (CRS), and the answer will likely arrive state by state.

One more layering detail worth noticing: expenses named in state-level coverage of the program, such as dual enrollment and testing fees in North Carolina’s framing (Carolina Journal), sit close to the record-keeping questions covered in the transcript and GPA guide and the college admissions guide. A scholarship that pays for a dual-enrollment course in 2027 will eventually need to show up correctly on a transcript.

Between now and January

A short checklist for a homeschool family that wants to be ready rather than early:

1. Confirm the state is participating on the IRS’s official page (Federal Scholarship Tax Credit), not on a third-party tracker, and recheck it after the proposed regulations publish.
2. Establish how the state’s law classifies a homeschool: as a school, the way North Carolina does (§115C-563), or as a separate home-instruction category. The state laws guide is the starting point; this classification is the eligibility hinge.
3. Watch for the proposed regulations, due by the end of September 2026 per Treasury’s stated timeline (Treasury preview). They are the document that converts most of this guide’s “previewed” qualifiers into rules.
4. Identify the state’s SGO roster or administering agency, where one exists: Virginia’s designated SGOs (WVVA), North Carolina’s SEAA (Carolina Journal).
5. Assemble income documentation along the lines Treasury previewed: recent paystubs, the latest tax return or IRS transcript, W-2s, or proof of enrollment in a qualifying needs-based program (Treasury preview).
6. For a planned donation: cash only, to a listed SGO, $1,700 maximum per taxpayer per the statute retrieved August 2026 (§25F), with no state-credit double-dip and no charitable deduction on top (Notice 2025-70).

Families should confirm the tax treatment of any contribution or scholarship with a tax professional before acting; this guide describes the program, not any household’s return.