Imagine a parent in your neighborhood who wants a different school, or additional educational support for their kid but cannot afford the cost. Now imagine all of the local taxpayers who would happily help, especially if it did not cost them anything out of pocket. The Education Freedom Tax Credit (or Federal Scholarship Tax Credit if you prefer) makes that connection possible, and it is already law!
Signed on July 4, 2025, the EFTC is simple at its core. If you owe federal taxes, you can donate up to $1,700 to a Scholarship Granting Organization and receive a dollar-for-dollar tax credit for the full amount. You were going to pay that money to the IRS anyway. Now you can send it to a local scholarship fund instead, and a student in your community gets a shot at the school and services that fits their needs best.
That is not a tax loophole. That is a local economic stimulus program hiding inside the tax code.
Why This One Is Different
I have worked in the scholarship tax credit space for years, and I have seen plenty of programs come and go. What makes the EFTC different is its scale. There is no cap on how many people can participate nationwide. Families earning up to 300% of area median income qualify, which covers roughly 90% of students in every state. And the credit is permanent. It does not expire.
Most state programs run out of funding within days of opening. Every year it is the same scramble. The EFTC does not work that way. There is no lottery, no waiting list, and no allocation process. If a donor wants to give and a student qualifies, the scholarship happens. That kind of simplicity is rare in education policy, and it is what makes this program so powerful.
Local Donors. Local Scholarships. Local Impact.
This is the part that gets me excited. The EFTC is not some distant federal program that sends money through layers of bureaucracy. It is the opposite. A donor in your town gives to an SGO that serves your schools, and that money becomes a scholarship for a student in your community. The dollars stay local. The impact stays local. Local donors supporting local scholarships.
For communities that have watched education funding debates play out in faraway capital buildings, this is a chance to take matters into their own hands. Your neighbors fund your students. Your businesses invest in your schools. That is how it should work.
Pennsylvania Is on the Clock
More than 30 states have already opted into the EFTC. Red states, blue states, and everything in between. Colorado's Democratic governor signed on. New York’s Governor indicated they are in the process of signing on. Kentucky and Kansas overrode gubernatorial vetoes to make it happen.
Pennsylvania has not. Governor Shapiro has not acted, and every day we wait, potential scholarship dollars that could be kept right here flow to families in other states instead. That stings, because Pennsylvania was a pioneer in this space. Our EITC program was one of the first of its kind in the country. We should be leading, not watching from the sidelines.
FundEDU is working with policymakers, school communities, and coalitions across the state to change that. If you believe Pennsylvania families deserve the same opportunity that 30 other states already have, our EFTC Advocacy Kit can help you make your voice heard.
What Comes Next
At FundEDU, we are not just talking about the EFTC. We are building for it. We are partnering with a new Scholarship Granting Organization designed from the ground up for this program, so that when credits become available in January 2027, families and donors in our community have somewhere to go. We are making it happen for schools. If you are a school exploring what this could mean for your students, start with our EFTC Readiness Navigator.
Only a few months from now, the largest expansion of K-12 scholarship funding in American history goes live. The only questions are whether Pennsylvania will be part of it, and how many students we can help!
- Featured Image by Leisa Collins