If you homeschool, you have probably seen the headlines this week. On October 1, 2026, the Treasury Department and IRS released the long-awaited proposed rules for the Federal Scholarship Tax Credit, the first school choice program in U.S. history that reaches across state lines.1,2 It launches January 1, 2027.1
Here is what it is, who it helps, where homeschooling fits, and what is still being worked out.
The short version
Beginning in 2027, eligible individual donors may claim a nonrefundable federal income-tax credit of up to $1,700 for qualifying cash gifts to eligible Scholarship Granting Organizations (SGOs). Under the proposed rules, qualifying spouses filing jointly may potentially claim up to $3,400 combined. Tax liability and state-credit coordination can limit current-year use; unused credits may carry forward for up to five years.1,2,3 The SGO, a 501(c)(3) charity approved by a participating state, then awards scholarships to eligible K–12 students for education expenses.1 Treasury and the IRS project that by 2030 the program could draw contributions from more than 11 million taxpayers, direct nearly $26 billion a year, and fund as many as 2.2 million scholarships annually.2 Those 2030 figures are agency projections, not results the program has produced.
This is not an education savings account. There is no government account in your child’s name and no state agency approving your curriculum. You apply to a private charity, the charity decides awards based on need and available funds, and donors cannot earmark gifts for a particular child.9 That structure is a big reason the Home School Legal Defense Association, which opposes ESAs for homeschooling, says it supports this program “for now.”9
Who qualifies
Two tests. First, your child must be eligible to enroll in a public elementary or secondary school in your state. Second, your household income must be no more than 300 percent of your area’s median gross income.8 Because the limit tracks local income, it varies enormously: Education Week cites an EdChoice analysis putting it as high as $616,500 in Santa Clara County, California, and as low as $107,100 in Oglala Lakota County, South Dakota.5 Treasury estimates that about 96 percent of children in participating states would be eligible.1 Certain families already in needs-based programs, and foster children, get a streamlined verification path.1
The catch is the word “participating.” Only students in states that opt in can receive scholarships.8 As of the most recent Treasury list reported by the Associated Press, 30 states were in for 2027: Alabama, Alaska, Arkansas, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia and Wyoming.4 Education Week counted 31 states opted in or on track as of October 1, with students in 19 states left out for now.6 If your state is not on the list, you can still donate and claim the credit, but your gift must go to an SGO serving students in a participating state.5,17
Where homeschooling fits
This is the part homeschool families care about most, so it deserves precision. Treasury officials told the Associated Press that scholarship funds could be used for religious or private school tuition, homeschooling costs, tutoring, special education therapies, books, computers and other expenses connected to enrollment or attendance.4 The IRS release lists private-school tuition, academic tutoring, special-needs services, books, supplies, computers and other equipment.2
The proposed rule itself is more technical. It defines qualified expenses by pointing to the Coverdell education savings account list in section 530(b)(3)(A) of the tax code, and it defines “school” as “any school that provides elementary education or secondary education (kindergarten through grade 12), as determined under State law.”3 That last phrase is why your state’s legal definition of homeschooling matters: in some states a homeschool is legally a private school, while in others it is its own category. Treasury says it received comments asking for clarity on qualified expenses and schools and intends “to issue that guidance as soon as possible so that taxpayers may rely on it.”3 The AP reported that specific criteria for eligible expenses had not yet been provided.4
Here is the encouraging part. The rule bars participating states from imposing more restrictive requirements, “such as by limiting the type of school that scholarship recipients may attend or the types of qualified elementary or secondary education expenses for which scholarship funds may be used.”3 In other words, a state that opts in cannot carve homeschoolers out of what federal law allows.
How big could scholarships be?
Nobody knows yet, and that is by design. The donor’s credit is capped at $1,700, but scholarship amounts are not; each SGO sets award sizes based on its mission and funds, and the law requires SGOs to spend at least 90 percent of their income on scholarships.8 The Congressional Research Service notes the enacted law has no annual cap on total credits claimed nationwide, unlike earlier drafts.7
Why this moment matters
The program lands as homeschooling keeps growing. The Johns Hopkins Homeschool Research Lab reported in August 2026 that homeschooling grew at an average rate of 4.9 percent during the 2024–25 school year, more than double the pre-pandemic rate of around 2 percent, with 36 percent of reporting states hitting their highest homeschool enrollment ever.12 The Census Bureau’s Household Pulse Survey, as documented by Johns Hopkins, put homeschooled children at 5.92 percent of school-aged kids in 2023–24.11 The National Home Education Research Institute estimates 3.408 million homeschooled K–12 students in 2024–25.13
The research base is improving too. A 2026 systematic review in the Peabody Journal of Education found that of 24 studies on academic achievement published since 2017, 15 favored homeschooled students; of 25 studies on social and emotional development, 16 were clearly positive for homeschoolers.14 The authors caution that these are associations, not proof of causation, because families cannot be randomly assigned to school types.14
Key dates to put on your calendar
- December 1, 2026: written comments on the proposed rules are due; a public hearing is scheduled for December 15, 2026.3
- January 1, 2027: donations become eligible for the credit, and states must have opted in for their students to receive scholarships in the coming year.1,5
- February 15, 2027: states must finalize their SGO rosters, according to a Treasury official quoted by Education Week.5
- 2028: donors claim the credit for 2027 contributions on their tax returns.7
Takeaways
- The credit is real, nationwide, and starts January 1, 2027, in 30-plus participating states.1,4,6
- Treasury officials say homeschooling costs are a permitted use; the formal expense guidance is still coming, so watch for it.3,4
- You apply to a private SGO, not the government, and states cannot narrow what federal law allows.3,9
- If your state has not opted in, you can still donate and claim the credit; your children just cannot receive awards yet.5,17
Want to get organized before January? Read our follow-up: six practical steps to be ready for 2027 scholarship funding.
This post is educational, not legal or tax advice. Program details are still being finalized and homeschool requirements vary by state; confirm current rules with your state education agency and talk with a qualified tax professional before making decisions.