Choose Where Your Tax Dollars Go: The New Education Freedom Tax Credit

This article was written by Spencer Carroll, CPA, of Gelt, featuring Samyr Qureshi, founder of Tax Credits for Education and a Gelt client. It is general education, not tax advice. Figures reflect tax year 2027 and Treasury/IRS proposed regulations as of October 2026, which may change before they are finalized.

Starting January 1, 2027, the new Education Freedom Tax Credit (officially the Federal Scholarship Tax Credit) lets you send up to $1,700 of your federal income tax to K-12 scholarships instead of to the IRS. Married couples filing jointly can direct up to $3,400. It is a dollar-for-dollar credit: you owe the tax either way, and this lets you decide where part of it goes.

We sat down with Samyr Qureshi of Tax Credits for Education to walk through how it works and why it is worth planning for now. As Samyr put it:

"You're going to have to pay the money to taxes anyway, so why not just give it to scholarships?"

What is the Education Freedom Tax Credit?

The credit was created by the One Big Beautiful Bill Act and lives in Section 25F of the Internal Revenue Code. You make a cash gift to a qualifying Scholarship Granting Organization (SGO), and your federal income tax drops by the same amount, up to the annual cap.

Filing statusMaximum credit per yearSingle / individual$1,700Married filing jointly$3,400*

*Joint treatment comes from Treasury/IRS proposed regulations, and each spouse has to make their own qualifying contribution.

Education Freedom Tax Credit rules to know before you plan

Where the money goes

SGOs pass the funds to families as K-12 scholarships for students in households earning up to 300% of their area's median income. Samyr called it "basically a catch-all bucket." Under the law, scholarships can cover tuition, tutoring, special needs services, books, supplies, and some extended-day programs, at public, private, and religious schools, as defined by state law.

Samyr has spent his career in education. He founded and exited a higher-ed company, and today works with Primer, a network of small, teacher-led micro-schools in several states. According to Samyr, about 80% of Primer families are low-to-middle income.

Primer's program costs roughly $15,000 a year. Thanks to state school choice programs, most families pay no more than a few hundred dollars a month. Scholarships funded through the Education Freedom Tax Credit can bring that out-of-pocket cost down further.

To keep things simple for donors, Samyr launched Tax Credits for Education, which educates taxpayers and connects them with a partner scholarship organization.

"This could be the biggest shift in American education in the history of our nation because it aligns the incentives where taxpayers can help fund families with dollars that they would otherwise owe in federal income taxes. For donors who take advantage of this credit, a qualifying contribution comes at no additional net cost. That makes participating a no-brainer. I founded Tax Credits for Education to help people understand this opportunity and turn it into real scholarships for kids." Samyr Qureshi, Founder of Tax Credits for Education

Why it is a big deal

Samyr described the credit as possibly the largest education funding measure in U.S. history. His estimates:

On its own, $1,700 or $3,400 is not a life-changing number for a business owner. But most of the owners we work with want to know about every legitimate way to point their tax dollars toward something they care about, and this one costs nothing extra if you plan it correctly.

How to get ready for 2027

Nothing can be given until January, but now is the right time to plan, especially if you are already working through year-end tax planning for your business. Here is what we suggest:

Have questions about the program itself? Samyr is happy to help at samyr@withprimer.com or 727-412-2139. He does not give tax advice, so for anything specific to your return, reach out to your Gelt team.

Frequently asked questions

What is the Education Freedom Tax Credit?

It is a new federal tax credit under IRC Section 25F, also called the Federal Scholarship Tax Credit. Starting in tax year 2027, you can donate cash to a qualifying Scholarship Granting Organization and reduce your federal income tax dollar for dollar, up to $1,700 per person.

How much is the Education Freedom Tax Credit worth for married couples?

Under Treasury/IRS proposed regulations, married couples filing jointly can claim up to $3,400, but each spouse has to make their own qualifying contribution of up to $1,700.

When can I start donating?

The credit applies to contributions made on or after January 1, 2027. Gifts made in 2026 do not qualify.

Can I also deduct the donation as a charitable contribution?

No. The portion of a gift that generates the federal credit cannot also be deducted as a charitable contribution. Any amount above the credit may still be deductible under the normal charitable rules.

Does my state have to participate for me to claim it?

No. You can give to an SGO listed by any participating state, no matter where you live. The scholarships themselves go to students in the participating state.

What happens if I don't owe enough federal tax to use the full credit?

The credit is nonrefundable, so it only offsets tax you owe. Any unused amount can carry forward for up to five years.

At Gelt, compliance is the baseline. Finding smart moves like this one, before the year even starts, is the real work. If you want to see how the Education Freedom Tax Credit fits into your 2027 plan, talk to a Gelt strategist. For more on why timing matters, read our guide to proactive tax planning.