North Carolina Federal Scholarship Tax Credit begins Jan. 1, 2027

With fewer than 100 days until the new Federal Scholarship Tax Credit takes effect on Jan. 1, 2027, 30 states, including North Carolina, have already made advance elections to participate. On Sept. 24, the National Catholic Educational Association (NCEA) highlighted an important feature of the program: scholarships may support qualified educational expenses for eligible K-12 students attending public, private or religious schools.

States must opt in before taxpayers can claim credits for donations to scholarship organizations serving eligible public, private and religious school students.

Beginning in 2027, individual taxpayers may claim a nonrefundable federal income tax credit equal to qualifying cash contributions, up to $1,700 per taxpayer per year, to Scholarship Granting Organizations, or SGOs. Before contributions to an SGO in a state can qualify for the credit, that state must elect to participate and provide the Internal Revenue Service with a list of qualifying SGOs.

“Families should know that this program reaches beyond private-school tuition,” said President and CEO of the National Catholic Educational Association Steven Cheeseman. “It can help families who believe a Catholic or another nonpublic school is the right place for their child. It can also help an eligible student remain in a public school and potentially receive support for tutoring, books, technology, special-needs services or a qualifying extended-day program.”

Under the federal definition of qualified expenses, eligible public-school students may receive SGO scholarships for academic tutoring; special-needs services; books, supplies and other educational equipment; computers and internet access; and after-school support through qualifying extended-day programs that are required or provided by the school. The same federal definition applies to eligible students attending private and religious schools.

That broader reach is central to NCEA’s support for the program. A Pew Research Center survey found that 86 percent of Catholic teenagers attend public schools, compared with 9 percent who attend religious private schools. NCEA is advocating for the credit because it could both help families afford a Catholic or another nonpublic education when that is their choice and provide eligible students who remain in public schools with access to tutoring, technology, school-provided extended-day programs and other qualifying support.

“For a working family, that assistance could help make a school-provided extended-day program affordable. For a child who has fallen behind, it could help pay for academic tutoring. For a student with special needs, it could support qualifying services or equipment. Scholarship availability, approved expenses and award amounts will depend on federal rules and each SGO’s program requirements,” stated Cheeseman.

The potential need for additional support is significant. The National Center for Education Statistics reported that public-school leaders estimated 31 percent of students were behind grade level at the end of the 2024-25 school year, while 85 percent of public schools reported providing some form of tutoring during that school year.

Separate federal data on after-school programs found that 60 percent of public schools offered academically focused after-school programming during the 2024-25 school year, but only 42 percent said they could provide those programs to every student who wanted to participate.

“A family may need help with tuition, or it may need a tutor, educational technology or a safe academic program after the school day ends,” Cheeseman said. “This credit creates a new way for eligible families to seek educational support based on what their child actually needs.”

The IRS currently lists 30 states that have made advance elections for 2027. Participating states also must submit a list of qualifying SGOs before taxpayers can make credit-eligible contributions to those organizations. Federal guidance says a state’s 2027 list is due by Jan. 1, 2027, or as early as practicable.

“As the Jan. 1 launch approaches, governors, SGOs, donors and families need clear information about how the program works and whom it can serve,” Cheeseman said. “The public-school benefits should be part of that conversation.”

To see the guidance issued by the IRS, click here.

If you have additional questions about the Federal Scholarship Tax Credit, you can reach out to: press@ncea.org

Sept. 25, 2026

Provided by the National Catholic Educational Association. In service of the Gospel of Jesus Christ, NCEA strengthens Catholic school communities by convening all stakeholders and providing professional development, data, public policy and resources to support faith and intellectual formation. Founded in 1904, NCEA represents more than 150,000 Catholic educators serving students in schools, universities and religious education programs across the United States. Learn more at NCEA.org.

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